Optimism grew on Thursday that the   war in the Middle East   may be near an end, with a key Pakistani mediator in Tehran and the administration of President Donald Trump talking up ​hopes for a deal that would open the crucial Strait of Hormuz. Israel's cabinet met on Wednesday to discuss   a possible ceasefire   in neighbouring Lebanon, a senior Israeli official said, more than six weeks ‌into its war with Iran-backed Hezbollah. Two senior Lebanese officials said they had been briefed that efforts were underway for a ceasefire but had no further details on how long it would last or when it would be announced.
Trump said talks between leaders of both countries would take place on Thursday, without providing details. Ending the fighting in Lebanon was a key sticking point in earlier peace talks, along with how to deal with Tehran's nuclear ambitions. "We feel good about the prospects of a deal," White House press secretary   Karoline Leavitt   said at a news conference on Wednesday, calling conversations mediated by Pakistan "productive and ongoing." She ⁠denied reports that the U.S. had formally requested an extension of a two-week ceasefire agreed by the two sides on April 8. More in-person talks had not yet been confirmed but would likely take place in Pakistan again, Leavitt ​said. Advertisement · Scroll to continue Pakistan's military confirmed Munir had arrived in Tehran. A senior Iranian source told Reuters that Munir, who had mediated the last round of talks, would seek "to narrow gaps" between the two sides. Mohammad Eslami, head of the Atomic Energy Organization of ​Iran, said talks needed to recognise Iran's rights, interests and dignity to be fruitful. "But if it continues, as it usually does, relying on deception and, in fact, on a lack of commitment and failure to adhere to agreements and set terms, then it naturally cannot succeed," he said during a pro-government rally in Tehran.

SOME INVESTORS REMAIN SCEPTICAL

The talks last weekend broke down without an agreement to end the war, which Trump began alongside Israel on February 28, triggering Iranian attacks on Iran's Gulf neighbours as well as reigniting the Israel-Hezbollah conflict. ​Thousands of people have been killed, mostly in Iran and Lebanon, while soaring energy costs have rattled investors and policymakers around the world. In northern Tehran, residents exercised in the park as they tried to resume their daily lives. Stock markets have   rallied strongly   in recent days on expectations of a swift resolution to the fighting, with ​indexes on Wall Street hitting record highs on Wednesday as crude oil prices steadied. "While there are hopes for de-escalation, many investors remain sceptical, given that U.S.-Iran talks have repeatedly broken down even after appearing to make progress," said Toshitaka Tazawa, an analyst at ‌Fujitomi Securities.

ECONOMIC ⁠PRESSURE ON IRAN

Treasury Secretary Scott Bessent predicted that China's purchase of Iranian oil would "pause" given a U.S. blockade on vessels calling at Iranian ports. He said the U.S. could impose secondary sanctions on countries that purchase Iranian crude. The U.S. Treasury had warned two Chinese banks not to process Iranian money or face sanctions, he said, without naming the banks. China previously bought more than 80% of Iran's shipped oil. Trump said on Wednesday he had told Chinese President Xi Jinping   not to give Iran weapons, which Xi had said he wasn't. Trump also said that China was very happy he was "permanently opening" the Strait of Hormuz. "I am doing it for them, also - And the World," he wrote on social media, adding: "President Xi will ​give me a big, fat, hug when I get there ​in a few weeks." The war has led Iran ⁠to effectively shut the Strait - a vital artery for global crude and gas shipments - to ships other than its own, sharply reducing exports from the Gulf and leaving energy importers scrambling for alternative supplies.

IRAN COULD ALLOW TRAFFIC ON OMANI SIDE OF STRAIT

Iran's joint military command warned it would halt trade flows in the Gulf, the Sea of Oman and the ​Red Sea - which connects to the Suez Canal - if the U.S. blockade continued. Iran could   consider allowing ships   to sail freely through the Omani side of the strait without ​risk of attack as part of ⁠proposals it has offered in negotiations with the U.S., providing a deal is clinched to prevent renewed conflict, a source briefed by Tehran said. Trump has also threatened to escalate if the war resumes. "We could take out every one of their bridges in one hour. We could take out every one of their power plants, electric power plants, in one hour. We don't want to do that...so we'll see what happens," he told Fox Business Network. Iran's nuclear ambitions were a key sticking point at last ⁠weekend's talks. The ​U.S. proposed a 20-year suspension of all nuclear activity by Iran - an apparent concession from longstanding demands for a permanent ban - while Tehran ​suggested a halt of three to five years, according to people familiar with the proposals. Washington has also pressed for any enriched nuclear material to be removed from Iran, while Tehran has demanded that international sanctions against it be lifted. One source involved in the talks said back-channel discussions had made ​progress in narrowing gaps, bringing the two sides closer to a deal that could be presented at a new round of talks.