Iran and US Continue Mediated Talks, Markets Hope for Breakthrough

Tehran, Iran – Iran and the US continue to negotiate through intermediaries in search of a common agreement, but a deal seems unlikely to be reached soon after another exchange of fire in an atmosphere of mutual mistrust.

The US military said it struck Iranian missile launchers and vessels attempting to lay mines in waters south of the country. Iranian state media reported that its military fired back and suffered casualties. However, the fragile ceasefire that took effect on April 8 remains unbroken for now.

Tehran’s markets appear to be expecting a common understanding with Washington, with Iran’s currency rising more than 5% this week. On Tuesday morning (May 26), the rial traded at around 1.73 million to the US dollar, though still near last month’s record lows.

The main index of the Tehran Stock Exchange also continued its rally this week, surpassing 4 million points on Tuesday morning, just a week after a controlled reopening. The index had hit an all-time high of around 4.5 million points early this year, but plunged after thousands were killed in nationwide protests in January and war approached.

Iran’s economy is under severe pressure from poor domestic management and mounting US pressure, including a naval blockade of southern Iranian ports. The blockade and the removal of the United Arab Emirates (UAE) as a major import route into Iran — Tehran’s relations with the UAE have deteriorated sharply during the war, following several Iranian missile attacks on the UAE — have caused heavy damage.

“Supply is being called into question for at least the next few months, so it’s impossible to predict what will happen in the market,” said a shopkeeper selling mobile phones and digital products in central Tehran, most of which were imported from the UAE before the war. “We see prices making customers change their minds, but it’s not just prices; you might not find the laptop you saw a week ago with the same specs today.”

The Iranian government is primarily focused on securing essential items such as food and medicine to weather the hardship. So far, there have been no reports of widespread severe shortages of essential goods, but prices are soaring. Runaway inflation continues to impoverish the population, war-ravaged industries will need significant capital and time to rebuild, and the near-total internet blackout imposed by authorities has destroyed more jobs.

On Monday evening, state media reported that President Masoud Pezeshkian had ordered preparations to restore global internet access after the longest nationwide blackout in history. However, there has been no confirmation from the Supreme National Security Council, the body that ordered the ban, and restrictions remained in place on Tuesday.

A Tehran resident said: “Anything to end the state of no war, no peace, no sign of a clear future is welcome. If this continues, it will have devastating consequences.”

A 64-year-old art teacher expressed confidence that Iran and the US would reach a deal, giving Iran a relatively stronger position than before the war. She argued that continued disruption in the Strait of Hormuz would pressure President Donald Trump to strike a deal and could free up some of Iran’s frozen assets abroad.

However, a 23-year-old student said that even if a memorandum of understanding is signed between the two sides, it would not end the pressure on the Iranian people. “A temporary deal may have positive points for both sides, but I think the war will resume after the World Cup,” referring to the football tournament hosted by the US, Mexico, and Canada, which ends on July 19.

In the meantime, Iranian politicians and pro-regime media continue to debate the value of any deal with Washington. Hardliners push for minimal concessions, arguing that Tehran’s position has been significantly strengthened after nearly 40 days of relentless attacks and blockade, while maintaining disruption in the Strait of Hormuz.

Mahmoud Nabavian, a hardline cleric, lawmaker and member of Iran’s negotiating delegation in the first round of talks in Pakistan in April, published a letter to the parliament speaker and security chief. “Reopening the Strait of Hormuz in exchange for lifting the blockade goes against the interests of the Iranian nation,” he wrote, stressing that all sanctions must be lifted and Tehran must maintain sovereignty over the strategic waterway.

The Keyhan newspaper, whose editor-in-chief was appointed by the late Supreme Leader Ayatollah Ali Khamenei, argued that talks should stop because the US refused to issue a visa for Foreign Minister Abbas Araghchi to attend a UN Security Council meeting on the war in New York.