Military adviser to Iran's supreme leader says talks with US have stalled

A senior Iranian official told CNN on Friday that a potential agreement hinges on Washington releasing $24 billion in frozen Iranian funds, warning the United States would enter a "dark corridor" if it resumes military action.

The comments came as Iran also tied the future of a broader peace arrangement to developments in Lebanon, Hezbollah and the reopening of the Strait of Hormuz.

For President Donald Trump, the standoff is testing whether his mix of pressure, unpredictability and military force can break a negotiating playbook that has frustrated successive US administrations.

"The Islamic Republic gets a vote here too," Jason Brodsky, policy director at United Against Nuclear Iran, told Eye for Iran. "The Iranian regime plays a much longer game than the United States does in terms of its strategic patience and strategy."

Brodsky said Iran has historically used prolonged negotiations to wear down international demands, pointing to how the original US position of zero enrichment eventually gave way to the 2015 nuclear deal's limited enrichment framework.

But he argued Trump has changed the baseline by demonstrating a willingness to use force.

"For the first time in decades, the Islamic Republic is not enriching uranium," Brodsky said, crediting US and Israeli military action with changing the facts on the ground.

Can Trump outlast Tehran's long game?

Former US diplomat Alberto Fernandez said Trump may possess an advantage previous administrations lacked: the ability to walk away from a deal while maintaining pressure.

"No deal is better than a bad deal," Fernandez said, arguing that Trump could refuse sanctions relief, maintain the blockade and preserve the threat of future strikes if Tehran refuses to compromise.

Still, there are concerns that Iran's strategy may be working in more subtle ways. Tehran has long relied on protracted negotiations to buy time, lower demands and secure concessions incrementally.

Daily Mail special correspondent David Patrikarakos warned that if Iran secures a limited nuclear agreement without restrictions on missiles or regional activity, it could still claim victory.

"If what Iran gets is a ring-fenced nuclear deal, then honestly, it's a defeat and it is a win for the Iranians," he said.

The question is whether Trump can sustain pressure long enough to force a broader agreement—or whether domestic politics, oil prices and regional tensions ultimately push Washington toward a narrower deal.

Is Iran's leverage shrinking?

That question extends beyond the nuclear file.

In Lebanon, President Joseph Aoun delivered a rare public rebuke to Tehran this week, accusing Iran of using his country as a "bargaining chip" in its confrontation with Washington and Israel.

"You are not trying to help us," Aoun told CNN. "The people of Lebanon are paying the price for the sake of your own interest."

He also directed a message to Iran's Islamic Revolutionary Guard Corps: "It's not your country, it's our country."

The comments reflect growing frustration among Lebanese officials who argue their country has paid the price for regional conflicts driven by outside powers.

May Farhat, Iran International's correspondent in Beirut, said Hezbollah is facing one of the weakest periods in its history after major military and political setbacks.

"There is little doubt that Hezbollah is going through one of the most difficult periods in its history," Farhat told Eye for Iran.

She pointed to the killing of senior commanders, the loss of Hassan Nasrallah, tighter border controls and new Lebanese restrictions on Iranian access as evidence that the balance of power inside Lebanon is shifting.

For the first time in years, Lebanese authorities have suspended direct Iranian flights, tightened visa requirements for Iranian citizens and moved to limit Tehran's influence over strategic infrastructure and border crossings.

The weakening of Hezbollah matters because it potentially reduces one of Tehran's most important sources of regional leverage at a moment when Iran is attempting to negotiate from a position of strength.

The Strait of Hormuz represents another test of Iran's leverage.

For decades, the Islamic Republic has used the threat of disruption in the waterway as one of its most powerful strategic tools. But according to Homayoun Falakshahi, who leads Kpler's crude oil analysis team, that leverage may already be eroding.

Falakshahi said oil tanker traffic through the Strait of Hormuz has fallen dramatically since the war and the US blockade on Iranian ports. Before the conflict, roughly 30 oil tankers transited the waterway daily. Today, the average is closer to one or two.

More importantly, he argues that the crisis is accelerating efforts by Gulf states to reduce their dependence on the strait altogether.

Abu Dhabi is already expanding export capacity through Fujairah on the Gulf of Oman, while other producers are exploring alternative routes.

"Five years from now, that leverage that the Islamic Republic currently has probably will not exist anymore," Falakshahi said.

He believes Iran may be overestimating the long-term value of its position.

"They always overplay their hand," he said.

While the disruption of the Strait of Hormuz has demonstrated Tehran's ability to shake global energy markets, Falakshahi argues that the strategy ultimately hurts Iran's own interests by damaging China, its most important oil customer and strategic partner.

"I don't think they have the upper hand," he said. "Even though they want everyone to believe that they have."

For now, Iran is testing the limits: in Lebanon, in the Persian Gulf, at sea and at the negotiating table.

Trump may have disrupted Tehran's playbook. But whether he has cracked it will depend on whether pressure produces a durable agreement—or simply another pause in a decades-long confrontation.

Recent reports by state-linked, reformist and business-affiliated institutions suggest growing concern not only about economic hardship but also about its long-term social consequences.

One of the most striking indicators comes from Eghtesad News, which reported in May that Iran's middle class, estimated at 65% to 70% of the population at the beginning of the 2010s, now accounts for only around half of the country's population.

While the recent conflict involving Israel and the United States has intensified economic pressures, many analysts argue that the underlying deterioration long predates the war.

A separate study highlighted by the state-owned Mehr News Agency points to mounting pressure on small and medium-sized enterprises (SMEs), which remain among the largest employers of working- and lower-middle-class Iranians.

According to the Iran Chamber of Commerce Research Center, macroeconomic pressures are "systematically destroying" SMEs while leaving large state-backed entities comparatively insulated.

Unable to access affordable financing and struggling with rising costs, many businesses have resorted to what the report describes as "hidden layoffs"—reducing working hours, delaying wage payments and replacing long-term contracts with temporary arrangements.

The result, according to the report, is a gradual shift of workers out of the formal economy and into more precarious forms of employment.

That trend is explored in a separate analysis published by the reformist website Rouydad24, which traces the growth of informal labor to the sanctions shock that followed intensified international pressure in 2012.

Industries dependent on foreign trade and international supply chains increasingly turned to informal employment arrangements, hiring workers without insurance coverage or social-security protections.

According to the report, the probability of workers entering the informal economy rose by roughly 9% following the sanctions shock, with the effects becoming more pronounced over time.

While the informal sector helped absorb displaced workers and prevented a sharper rise in unemployment, the long-term costs have been significant. Analysts cited by Rouydad24 point to lower productivity, weaker tax collection and growing strain on pension funds as insurance contributions decline.

Low-skilled and less-educated workers have experienced the highest rates of displacement into insecure employment, while rural communities have seen some of the sharpest reductions in working hours and income stability.

What began as a deterioration in working-class security has increasingly spread into the middle class, leading to housing insecurity, declining consumption, shrinking access to cultural activities and growing economic pessimism.

Property prices and rents have risen far faster than incomes, forcing many households into smaller homes, peripheral neighborhoods or satellite towns on the outskirts of major cities.

Economists warn that such displacement carries broader social consequences, weakening community ties, increasing commuting times and reducing overall quality of life.

Inflation has also altered household consumption patterns. Reports increasingly describe families reducing spending on meat, dairy products and other staples, while expenditures on books, cinema, travel, restaurants and other cultural activities have become harder to sustain.

The cumulative effect is a gradual narrowing of the economic and social space traditionally associated with middle-class life.

These assessments stand in sharp contrast to recent remarks by Vice President Jafar Ghaempanah, who said that 82% of Iranians were satisfied with market management and the availability of essential goods during the war.

His comments came as government officials simultaneously acknowledged that authorities were unable to increase the purchasing power of subsidized coupons used to buy basic necessities.

For many economists, the central concern extends beyond living standards. Historically, Iran's middle class has played an important role in education, entrepreneurship, professional development and civic participation.

As economic pressures push more households downward, analysts increasingly warn of declining social mobility, weaker social trust and a growing risk of future instability.

The warnings emerging from Iranian experts converge on a similar point: the country's economic difficulties are no longer confined to the poorest segments of society and are reshaping the social foundations on which long-term stability depends.

Iranian oil prices have fallen into discount for the first time since April, as weak demand from Chinese refiners outweighs tighter supply caused by a sharp drop in exports under the US blockade, Reuters reported on Friday.

Iranian Light crude is being offered at a discount of 50 cents to $1 per barrel against ICE Brent for delivery this month to China’s eastern Shandong province, three traders told Reuters. The grade had traded at premiums of $1 to $2 in the previous two months.

Shandong is home to China’s independent refiners, known as teapots, which are among the main buyers of sanctioned Iranian oil. But weak fuel demand and poor refining margins have forced some of them to cut processing rates.

“Buyers aren’t accelerating procurement even if supply is tight, because prices are still too high for teapots who are suffering great losses,” said Xu Muyu, senior crude oil analyst at Kpler. “Also teapots are lowering run rates, so demand is also coming down.”

The United States is preparing a draft resolution condemning Iran ahead of next week’s meeting of the UN nuclear watchdog’s Board of Governors, Reuters reported on Friday citing diplomats, in a move that could complicate wider negotiations between Washington and Tehran.

The draft is being prepared as the two sides negotiate an extension of their ceasefire, which could open the way for talks on Iran’s nuclear program and other disputed issues.

Diplomats said the resolution, if formally submitted to the International Atomic Energy Agency’s board, would increase pressure on Iran at a sensitive moment in the broader US-Iran diplomatic track.

According to recent media reports, negotiators are discussing a package worth roughly $12 billion that could become available if a preliminary agreement with the United States is reached.

The issue matters because even partial access to blocked funds could affect Iran's currency market, imports, government finances and broader economy.

Iranian officials estimate that more than $100 billion in assets remain inaccessible because of sanctions, banking restrictions and legal disputes that have accumulated over decades. Not all of that money would necessarily become available even in the event of an agreement, as some assets remain tied up in court cases and other restrictions unrelated to sanctions.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf recently traveled to Qatar, where discussions reportedly touched on the release of frozen Iranian funds.

Saeed Ajorlou, a member of the media team accompanying Iran's negotiating delegation, said in a televised interview on June 2 that the talks had been successful. He stated that once a framework agreement receives final approval, a portion of Iran's blocked assets should become available to the Central Bank of Iran in a manner that could not easily be reversed.

He also indicated that Tehran is seeking guarantees that access to the funds will continue and has linked the release of assets to the implementation of any future agreement.

Why the funds matter

A large share of Iran's blocked assets consists of oil revenues accumulated in foreign banks after the United States withdrew from the 2015 nuclear agreement in 2018 and reimposed sweeping sanctions.

Secondary sanctions made it difficult for countries purchasing Iranian oil to transfer payments directly to Tehran, causing substantial sums to accumulate in overseas accounts.

Economists say that even partial access to these resources could provide a significant boost to Iran's economy.

One immediate effect would be an increase in the Central Bank's foreign currency reserves, strengthening its ability to manage exchange-rate volatility. Additional funds could also be used to finance infrastructure projects, pay government obligations and support imports of essential goods, industrial equipment, raw materials and technology needed by domestic industries.

South Korea

South Korea once held one of the largest pools of frozen Iranian funds.

Roughly $6 billion in oil revenues accumulated in two South Korean banks before being transferred to accounts in Qatar in 2023 as part of a prisoner-exchange agreement between Tehran and Washington.

Although Iranian officials initially described the funds as released, access has remained subject to significant restrictions and the money has largely remained beyond Tehran's direct control.

Iraq

Iraq represents another major source of Iranian claims.

Much of the money stems from Iraqi purchases of Iranian natural gas and electricity. While neither side has publicly confirmed an exact figure, Iranian officials have repeatedly said that outstanding payments amount to several billion dollars.

Some of these funds have already been used for humanitarian purchases under arrangements approved by the United States. Estimates suggest that Iran could eventually gain access to between $10 billion and $12 billion held in Iraq if restrictions are eased.

China, India and Japan

China and India present a more complicated picture.

Iranian officials often avoid describing funds held in those countries as formally frozen, arguing that mechanisms exist to use at least part of the money for trade and imports.

Nevertheless, transactions remain difficult because banks and intermediaries facilitating such transfers risk exposure to US sanctions.

Iranian estimates place holdings in China in the tens of billions of dollars, while funds in India are believed to total roughly $7 billion.

Japan also holds Iranian funds linked to oil sales. Estimates generally range from $1.5 billion to $3 billion, although the exact amount remains unclear. Japanese authorities have occasionally allowed limited payments for humanitarian imports and Iran's obligations to international organizations, but most of the money remains inaccessible.

Europe

In Europe, Iranian assets are spread across multiple countries and financial institutions. Their status is shaped not only by sanctions but also by legal disputes, court rulings and anti-money-laundering regulations.

Total Iranian assets affected by these issues are estimated at anywhere from several billion dollars to as much as $20 billion.

One of the most prominent disputes involves approximately $1.6 billion to $2 billion connected to accounts belonging to Iran's central bank in Luxembourg. These assets have been tied up in litigation involving efforts by holders of US court judgments to obtain compensation related to terrorism cases.

While the exact amount of Iranian assets that could ultimately be released remains uncertain, access even to a fraction of these funds could strengthen Iran's foreign-exchange reserves, ease pressure on imports and provide the government with a significant financial cushion.

For that reason, frozen assets have become one of the most important economic components of the ongoing negotiations between Tehran and Washington.