Military strike on Iran is a real possibility, former US diplomat says

Iran's financial markets reacted with a mix of caution and optimism in the wake of the latest round of nuclear talks with the US in Rome, a stark contrast to the dramatic response witnessed after the first round of negotiations in Muscat.

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Both Tehran and Washington described Saturday's Rome talks as constructive, agreeing to resume technical-level discussions in Oman, a key mediator between the two sides, starting Wednesday, ahead of a planned high-level meeting in Muscat next week.

Speaking on Sunday, Iranian government spokeswoman Fatemeh Mohajerani said the ongoing indirect negotiations had been positive. Referring to the crippling sanctions that have paralyzed Iran’s economy, she said that Tehran would welcome any practical initiative aimed at their removal.

Rial strengthens, gold retreats

Amid growing anticipation of a potential breakthrough, the Iranian rial appreciated modestly on Monday, trading at around 830,000 per US dollar on the open market. This follows a rebound from a record low of 1,050,000 in late March and early April, with the rial rising to around 850,000 after the initial talks in Muscat.

However, gold coin prices, a popular hedge against economic uncertainty for Iranian households, fell over the weekend, though the decline was less pronounced compared to the previous week.

Iranian media has reported that unlike the wave of currency selling seen after the Muscat talks—when long lines of sellers formed and exchange rates plummeted—Iranians have responded more cautiously this time, adopting a “wait-and-see” approach to selling their dollar bills and gold coins.

Sohrab Ashrafi, a forex and gold market analyst, told Shargh there is a sense of hope, but not enough confidence to trigger a full market reversal.

Stock market rebounds after months of lull

The Tehran Stock Exchange (TSE) showed greater enthusiasm, with significant gains on Sunday.

​The main index, TEDPIX, surged past 3 million points on Saturday and closed at 3,077,925 on Sunday— with a 2.16% increase day on day — marking one of its strongest performances in recent months.

​“Continued positive momentum in the talks could sustain this rally,” a commentary in Donya-ye Eghtesad, a leading economic daily, said. “Even in the absence of an immediate agreement, reduced geopolitical tensions alone can buoy market sentiment.”

Public skepticism persists despite market gains

Despite cautious optimism in financial markets, many ordinary Iranians remain skeptical about whether the negotiations will improve their everyday lives.

“There is little hope that prices will fall or living conditions will improve,” said one viewer in a message to Iran International TV. “Even if sanctions are lifted, it will be the children of the elite who benefit, not ordinary people,” he added.

Iran’s economy has been at its worst since the founding of the Islamic Republic in 1979, at least one-third of Iranians now live below the poverty line, and trust in the government is at an all-time low, as was seen in the record low voter turnout to elections last year.

Some other viewers voiced broader discontent with the political system, saying the nuclear talks are more about preserving the government’s grip on power than delivering economic relief.

One citizen said: “The Islamic Republic has ruined the economy. Prices are high, imports are of poor quality, and corruption is rampant,” adding that real change would only come if the Islamic Republic was overthrown.

“The essential demand of Iran is the removal of unjust sanctions,” Foreign Ministry spokesman Esmail Baghaei said on Monday during a weekly briefing. “These restrictions, imposed under the pretext of the nuclear file, have no legal foundation.”

He added that Iran remains willing to engage with concerns over its nuclear program as it has “for the past three decades.”

In November, Foreign Ministry spokesman Esmail Baghaei said, “The official stance of Iran in rejecting weapons of mass destruction and regarding the peaceful nature of the Islamic Republic of Iran’s nuclear program is clear".

Earlier this year, the UN nuclear watchdog, the International Atomic Energy Agency (IAEA), said Iran had enriched uranium to near weapons grade. Last week, the Wall Street Journal reported major gaps in the agency's understanding of Tehran's nuclear inventory since 2023 when Tehran banned dozens of inspectors and removed cameras in key sites.

Muscat to host next round of expert talks

Baghaei confirmed that the next expert-level meeting between Iran and the United States would be held in Oman, a key mediator in the talks, along with Italy.

Tehran says the negotiations are taking place without direct contact between Iranian and American negotiators. Efforts to restore the Joint Comprehensive Plan of Action (JCPOA) have faltered since the collapse of the 2015 deal following the US withdrawal in 2018 under the first administration of President Donald Trump.

According to Baghaei, the forthcoming technical talks will focus on the details of the framework that might underpin any future agreement.

“We are serious and swift, but a deal depends on the will of the counterpart. Constant references to the snapback mechanism are not constructive,” he said, referring to threats from European states to reimpose UN sanctions under the nuclear accord’s dispute resolution clause.

Beijing and Moscow remain ‘key interlocutors’

Iran's foreign minister is set to travel to China for consultations, Baghaei said, adding that Beijing and Moscow remain crucial interlocutors due to their roles in the UN Security Council and the 2015 nuclear deal.

“We have always been in contact with the European troika as well,” he said, referring to Britain, France, and Germany. These countries, alongside Russia and China, were original signatories of the JCPOA and remain engaged in efforts to salvage the deal.

Baghaei added that all such talks remain rooted in the framework of the nuclear agreement and UN Security Council Resolution 2231, which endorsed the JCPOA in 2015.

Tehran rejects pressure, denies Rome meeting with IAEA

Baghaei also rejected the idea that Iran would yield under pressure. “We do not change our positions under threats. We respond to goodwill with goodwill and know how to counter intimidation,” he said.

Iran has repeatedly warned it will not bow to coercive diplomacy, including military threats or economic isolation, a stance hardened by years of Western sanctions and regional conflict.

US President Donald Trump has warned of bombing Iran if Tehran fails to reach a deal over its nuclear program.

"If they don't make a deal, there will be bombing — and it will be bombing the likes of which they have never seen before," Trump said.

Baghaei also denied speculation about back-channel talks in Italy between Iran’s deputy foreign minister and the International Atomic Energy Agency chief Rafael Grossi.

“There were no meetings or discussions with Mr. Grossi in Rome,” he said. “He traveled there on his own initiative. We had already spoken with him in Tehran before the Rome talks, and saw no need for further discussions.”

Alma, which focuses on threats to northern Israel, assessed that Iran and Hezbollah want to reactivate the original land corridor stretching from the Iraqi border in eastern Syria to the Lebanese border in the west.

The institute highlighted recent reports of a potential halving of US troop numbers in Syria and the commencement of some withdrawals, such as from the Conico base in the Deir ez-Zor region.

Alma argued that this US drawdown would likely further embolden Iran and Hezbollah to solidify their foothold in the Syrian part of the corridor.

Even before a possible US withdrawal from the al-Tanf region in southeastern Syria, the analysis warned that a reduced American presence could lead to a significant shortening of the corridor route towards Lebanon and southern Syria.

This would potentially re-expose the Daraa province, bordering Israel, to increased Iranian influence and presence, Alma concluded.

Reports indicate a significant withdrawal of Iranian forces and allied militias from Syria after President Bashar Assad's removal in December, with personnel moving to Iran, Iraq, and Lebanon, abandoning military equipment.

While the dominant Hayat Tahrir al-Sham (HTS), which toppled the Assad government, is expected to block an immediate IRGC return due to past support for Assad, the Wall Street Journal cited US officials as saying that Iran will eventually attempt to re-establish its regional presence.

At its height, Iran maintained a substantial military infrastructure in Syria.

According to the Moshe Dayan Center for Middle Eastern and African Studies, Iran had as many as 10,000 IRGC forces in Syria at its peak during Syria's civil war, and another 5,000 army troops, plus thousands more Iranian-backed militia forces.

Their research showed that Iran held 55 military bases in Syria in addition to 515 military points.

The Saudi-owned Al Majalla news site reported similar numbers, citing that Syria had 830 foreign military sites under Assad, 70% of which belonged to Iran, 570.

Iran has not tied its domestic affairs to ongoing nuclear negotiations and is not yet prepared to receive American investment, government spokeswoman Fatemeh Mohajerani said on Monday.

“We are neither overly excited nor defensive about the negotiations, and we have not linked the country’s internal affairs to any talks,” Mohajerani said.

She added that infrastructure in Iran is currently unprepared for American investment, citing ongoing political issues. “There are still issues in the political sphere,” she said.