WRAPUP 4-Mediators still seek to bridge US, Iran gaps despite failure of face-to-face talks

Work has not halted to bridge gaps between the United States and Iran, sources ‌from ​mediator Pakistan said, despite the failure of face-to-face diplomacy after President Donald Trump called off a trip by his envoys over the weekend. Iranian sources disclosed Tehran's latest proposal on Monday, which would set aside discussion of Iran's nuclear programme until the war is ended and disputes over shipping from the Gulf are resolved.

Work has not halted to bridge gaps between the United States and Iran, sources ‌from ​mediator Pakistan said, despite the failure of face-to-face diplomacy after President Donald Trump called off a trip by his envoys over the weekend.

Iranian sources disclosed Tehran's latest proposal on Monday, which would set aside discussion of Iran's nuclear programme until the war is ended and disputes over shipping from the Gulf are resolved. That is unlikely to satisfy Washington, which says nuclear issues must be dealt with from the outset. Hopes of reviving peace efforts have receded since the U.S. president ‌scrapped a visit on Saturday by his envoy Steve Witkoff and son-in-law Jared Kushner to Islamabad, the Pakistani capital, where Iranian Foreign Minister Abbas Araqchi shuttled in and out twice over the weekend.

Araqchi also visited Oman over the weekend and went to Russia on Monday, where he met President Vladimir Putin and received words of support from a longstanding ally. With the warring sides still seemingly far apart on issues including Iran's nuclear ambitions and access through the crucial Strait of Hormuz, oil prices resumed their upward march when trade reopened on Monday. Brent crude was up around 2.5% at around $108 a barrel.

"If they want to talk, they can come to us, ‌or they can call us. You know, there is a telephone. We have nice, secure lines," Trump told "The Sunday Briefing" on Fox News. "They know what has to be in the agreement. It's very simple: They cannot have a nuclear weapon; otherwise, there's no reason to meet," Trump said.

ISLAMABAD REOPENS AFTER LOCKDOWN ‌TO HOST TALKS Senior Iranian sources, speaking on condition of anonymity, told Reuters the proposal carried by Araqchi to Islamabad over the weekend envisioned talks in stages, with the nuclear issue to be set aside at the start.

A first step would require ending the U.S.-Israeli war on Iran and providing guarantees that Washington cannot start it up again. Then negotiators would resolve the U.S. blockade and the fate of the Strait of Hormuz, which Iran aims to reopen under its control. Only then would talks look at other issues, including the longstanding dispute over Iran's nuclear programme, with Iran still seeking some kind of U.S. acknowledgment of its right to enrich uranium for what it says are peaceful purposes.

Asked about any new Iranian proposals, White House spokesperson Olivia Wales said: "These are sensitive diplomatic discussions and the ⁠U.S. will not ​negotiate through the press. "As the president has said, the United States holds the cards ⁠and will only make a deal that puts the American people first, never allowing Iran to have a nuclear weapon."

In a sign that no face-to-face meetings are planned any time soon, streets reopened in Pakistan's capital Islamabad, which had been locked down for a week in anticipation of talks that never took place. The luxury hotel that had been cleared out to serve as a ⁠venue was again taking reservations from the public. Pakistani officials said negotiations were still taking place remotely, but there were no plans to convene a meeting in person until the sides were close enough to sign a memorandum.

"The draft will be negotiated remotely till they reach some consensus," said a Pakistani source familiar with the negotiations. GLOBAL GROWTH OUTLOOK

Washington, which says ​its main war aim has always been preventing Iran from obtaining a nuclear weapon, wants Iran to give up a stockpile of highly enriched uranium and forgo further enrichment of material that could be used to make a bomb. Although a ceasefire has paused the U.S.-Israeli strikes on Iran ⁠that began on February 28, no agreement has been reached on terms to end a war that has killed thousands, driven up oil prices, fuelled inflation and darkened the outlook for global growth.

Both sides could be settling in for a test of wills, to see who can endure the economic pain before making concessions. Iran has largely blocked all shipping apart from its own from the Gulf through the ⁠Strait ​of Hormuz since the war began. This month, the United States began blockading Iranian ships.

TRUMP FACES DOMESTIC PRESSURE TO END WAR With his approval ratings falling, Trump faces domestic pressure to end the unpopular war. Iran's leaders, though weakened militarily, have found leverage in negotiations with their ability to stop shipping in the strait, which normally carries a fifth of global oil shipments.

While Araqchi met Pakistani officials, Trump, speaking in Florida on Saturday, said he cancelled his envoys' visit due to too much travel and expense for what he considered an inadequate Iranian offer. Iran "offered a lot, but not enough," he said. Iranian officials had already played down any ⁠suggestion that Araqchi might meet the Americans while in Islamabad.

FIGHTING INTENSIFIES IN LEBANON Fighting has intensified in Lebanon, where Israeli strikes killed 14 people and wounded 37 in the south on Sunday, according to the health ministry, making it the deadliest day since a U.S.-brokered ceasefire was agreed in mid-April.

Iran says it ⁠will not hold talks on the wider conflict unless a ceasefire also holds in ⁠Lebanon, which Israel invaded in March in pursuit of the Iran-backed group Hezbollah, which fired across the border in support of Tehran. Israel and Hezbollah blame each other for violating the truce agreed between Israel and the Lebanese government in Washington and extended last week.

Israeli forces have ordered hundreds of thousands of people out of their villages and have been bulldozing homes where they say Hezbollah fighters operated. The military warned residents on Sunday to leave seven more towns beyond the ‌occupied buffer zone. Reuters journalists on a vantage point across ‌the border in northern Israel filmed columns of smoke rising into the sky above southern Lebanon and the constant sound of explosions.