Oil, safe havens surge as U.S. strikes kill Iranian commander

By Herbert Lash and Marc Jones

NEW YORK/LONDON (Reuters) – Oil prices surged as much as $3 a barrel as gold, the yen and safe-haven bonds all rallied on Friday after the U.S. killing of Iran’s top military commander in an air strike in Iraq ratcheted up tensions between Washington and Tehran.

Traders were spooked after the death of Major General Qassem Soleimani, head of the elite Quds Force who was also one of Iran’s most influential figures, and by Iranian Supreme Leader Ayatollah Ali Khamenei’s vow of revenge.

Mideast-focused oil markets saw the most dramatic moves, with Brent oil futures leaping as much 4.5% to $69.20 a barrel. That was the highest since the attacks on Saudi crude facilities in September, though the impact hit almost every asset class.

Europe’s broad STOXX 600 index fell as much as 1% and shares on Wall Street almost the same as New Year optimism, which had pushed equity markets to new records, evaporated.

The yen rose half a percent against the dollar to a two-month high, the Swiss franc hit its highest against the euro since September and gold prices  climbed to a four-month peak, racing past the key $1,550 an ounce level.

“Geopolitics has come back to the table, and this is something that could have major cross-asset implications,” said Salman Ahmed, Lombard Odier’s chief investment strategist.

“What is critical is how it pans out in the next few days,” Ahmed said. “Whether it turns into a theme depends on Iran’s reaction and then the U.S. response.”

Iran promised harsh revenge. Soleimani’s Quds Force and its paramilitary proxies, ranging from Lebanon’s Hizbollah to the PMF in Iraq, have ample means to mount a response.

In September, U.S. officials blamed Iran for attacking the oil installations of Saudi Aramco, the state energy giant and the world’s largest oil exporter. Iran has denied responsibility for the strikes and accused Washington of war-mongering.

The Trump administration then did not respond, beyond heated rhetoric and threats, and markets settled down within a week after Brent surged 14.6%, its biggest one-day percentage gain since at least 1988.

The U.S. government and others on Friday urged their citizens in the region either to return home or to stay away from potential targets and public gatherings.

U.S. Secretary of State Mike Pompeo said in a round of TV interviews that the United States remained committed to de-escalation with Iran but that it had needed to defend itself.

“He (Soleimani) was actively plotting in the region to take actions – a big action as he described it – that would have put dozens if not hundreds of American lives at risk. We know it was imminent,” Pompeo told CNN.

MSCI’s gauge of stocks across the globe shed 0.43%, while its emerging markets index lost 0.32%.

On Wall Street, the Dow Jones Industrial Average  fell 210.81 points, or 0.73%, to 28,657.99. The S&P 500  lost 18.86 points, or 0.58%, to 3,238.99 and the Nasdaq Composite <.IXIC> dropped 58.26 points, or 0.64%, to 9,033.93.

The global gauge and Wall Street indices set record closing highs on Thursday, extending the year-end rally in equities.

Brent  hit a peak of $69.50 a barrel, its highest since mid-September, though it later traded up $2.40 to $68.65.

West Texas Intermediate  crude  rose $2.20 to $63.38 a barrel, after earlier spiking to $64.09 a barrel, its highest since April 2019.

SCRAMBLE TO SAFETY

Yields on German Bunds and U.S. Treasuries – the world’s benchmark government bonds that are typically seen as the safest assets – fell sharply.

 

The 10-year Bund  yield fell 7 basis points to a two-week low of -0.299%, while Bund futures  were up 0.51 percent, at 172.13 euros.

Benchmark 10-year Treasury notes rose 23/32 in price to yield 1.802%, from 1.882% late on Monday.

The dollar index fell 0.08%, with the euro up 0.06% to $1.1177. The Japanese yen  strengthened 0.59% versus the greenback at 107.94 per dollar.

The focus on geopolitics meant markets paid little attention to stronger-than-expected data from France, where inflation rose 1.6% year-on-year in December, beating analysts’ expectations for a 1.4% rise.

German inflation figures were also higher, although unemployment in Europe’s largest economy rose more than expected.

The U.S. manufacturing sector contracted in December by the most in more than a decade, with order volumes crashing to near an 11-year low and factory employment falling for a fifth straight month, the Institute for Supply Management said.

Investors also were looking forward to the minutes of the U.S. Federal Reserve’s Dec. 10-11 meeting due at 2 p.m. (1900 GMT).

(Reporting by Herbert Lash, additional reporting by Sujata Rao and Dhara Ranasinghe in London and Diptendu Lahiri in Bengaluru; Editing by Dan Grebler)

Rock-throwing Iraqi militias quit U.S. embassy after protests

By Ahmed Aboulenein

BAGHDAD (Reuters) – Supporters of Iranian-backed Iraqi paramilitary groups who stormed the U.S. embassy’s perimeter and hurled rocks in two days of protests withdrew on Wednesday after Washington dispatched extra troops and threatened reprisals against Tehran.

The demonstrators, angry at U.S. air strikes against the Tehran-backed Kataib Hezbollah group that killed at least 25 people, threw stones at the building while U.S. forces stationed on the rooftops fired tear gas to disperse them.

But by mid-afternoon, most appeared to have obeyed a call to withdraw, issued by the Popular Mobilization Forces (PMF) umbrella group of mainly Shi’ite militia, which said the demonstrators’ message had been heard.

Young men used palm tree branches to sweep the street in front of the embassy compound, while others packed up equipment and vans arrived to take people away. Some left to set up a protest camp in front of a nearby hotel.

Iraq’s military said all protesters had left by the evening.

The protests mark a new turn in the shadow war between Washington and Tehran playing out across the Middle East.

U.S. President Donald Trump, who faces re-election in 2020, on Tuesday threatened to retaliate against Iran but said later he did not want war.

The unrest followed U.S. air raids on Sunday against Kataib Hezbollah bases in retaliation for missile attacks that killed a U.S. contractor in northern Iraq last week.

On Tuesday, crowds chanted ‘Death to America!’, lit fires, and smashed surveillance cameras. They breached an outer perimeter of the embassy but did not enter the main compound.

BIGGEST U.S. EMBASSY

The huge embassy, built along the banks of the Tigris River in central Baghdad’s fortified “green zone” during American occupation following the 2003 invasion that toppled Saddam Hussein, is the biggest U.S. diplomatic mission in the world.

Washington said its diplomats were safe and was rushing hundreds of extra troops to the region.

The embassy said all public consular operations were suspended and all future appointments canceled.

The anti-American action comes after months of protests in Iraq against the government and the Iran-backed militias which support it. Many Iraqis complain their country has become a battlefield for a proxy war for influence between Washington and Tehran, and their leaders are too beholden to outside powers.

Iraq’s government has long faced frictions in its close relations with the two foes. Trump spoke to Prime Minister Adel Abdul Mahdi on Tuesday and demanded Iraq protect the embassy.

Iran’s Supreme Leader Ayatollah Ali Khamenei on Wednesday condemned the U.S. attacks. Iran summoned a Swiss envoy, who represents U.S. interests in Tehran, to complain about what it described as “warmongering” words from Washington.

Trump accused Iran of orchestrating the violence.

U.S. officials said 750 extra troops would initially be based out of Kuwait and as many as 4,000 troops could be sent to the region in coming days.

More than 5,000 U.S. troops are stationed in Iraq supporting local forces. The air strikes have galvanized calls inside Iraq to expel them.

Many in the crowd outside the embassy said ending Washington’s presence in Iraq was their main goal.

‘DEVIL’S DEN’

Despite decades of enmity between Iran and the United States, Iran-backed militias and U.S. forces found themselves on the same side during Iraq’s 2014-2017 war against Islamic State fighters, with both powers helping the government recapture territory from militants who had overrun a third of Iraq.

Since then, U.S. troops have yet to leave, while the Iran-backed militias have been incorporated into the security forces.

Prime Minister Adel Abdul Mahdi, who has announced plans to step down in the face of anti-government protests in which more than 450 people were killed, is backed by Iran and its allies.

The militia may have decided to pull back from the embassy to avoid making him look weak or to avert clashes with government forces.

Overnight, demonstrators had pitched tents and camped outside the embassy walls, then brought food, cooking equipment and mattresses during the morning, indicating plans to stay before the withdrawal call.

“Our sit-in is eternal, until this devil’s den is closed off forever, but don’t give anyone an excuse to make your protest violent. Don’t clash with security,” one protest leader told the crowd from a stage erected at the embassy before the departure.

Young men, some in fatigues, waved militia flags and chanted “Death to America” as Apache helicopters circled above.

The embassy’s outer walls bore scorch marks and graffiti.

“Iraq is not safe for America and its followers,” one read.

(Reporting by Ahmed Aboulenein; Editing by Angus MacSwan, Peter Graff and Andrew Cawthorne)

Special report: ‘Time to take out our swords’ – Inside Iran’s plot to attack Saudi Arabia

By Reuters staff

(Reuters) – Four months before a swarm of drones and missiles crippled the world’s biggest oil processing facility in Saudi Arabia, Iranian security officials gathered at a heavily fortified compound in Tehran.

The group included the top echelons of the Islamic Revolutionary Guard Corps, an elite branch of the Iranian military whose portfolio includes missile development and covert operations.

The main topic that day in May: How to punish the United States for pulling out of a landmark nuclear treaty and re-imposing economic sanctions on Iran, moves that have hit the Islamic Republic hard.

With Major General Hossein Salami, leader of the Revolutionary Guards, looking on, a senior commander took the floor.

“It is time to take out our swords and teach them a lesson,” the commander said, according to four people familiar with the meeting.

Hard-liners in the meeting talked of attacking high-value targets, including American military bases.

Yet, what ultimately emerged was a plan that stopped short of direct confrontation that could trigger a devastating U.S. response. Iran opted instead to target oil installations of America’s ally, Saudi Arabia, a proposal discussed by top Iranian military officials in that May meeting and at least four that followed.

This account, described to Reuters by three officials familiar with the meetings and a fourth close to Iran’s decision making, is the first to describe the role of Iran’s leaders in plotting the Sept. 14 attack on Saudi Aramco, Saudi Arabia’s state-controlled oil company.

These people said Iran’s Supreme Leader Ayatollah Ali Khamenei approved the operation, but with strict conditions: Iranian forces must avoid hitting any civilians or Americans.

Reuters was unable to confirm their version of events with Iran’s leadership. A Revolutionary Guards spokesman declined to comment. Tehran has steadfastly denied involvement.

Alireza Miryousefi, spokesman for the Iranian Mission to the United Nations in New York, rejected the version of events the four people described to Reuters. He said Iran played no part in the strikes, that no meetings of senior security officials took place to discuss such an operation, and that Khamenei did not authorize any attack.

“No, no, no, no, no, and no,” Miryousefi said to detailed questions from Reuters on the alleged gatherings and Khamenei’s purported role.

The Saudi government communications office did not respond to a request for comment.

The U.S. Central Intelligence Agency and Pentagon declined to comment. A senior Trump administration official did not directly comment on Reuters’ findings but said Tehran’s “behavior and its decades-long history of destructive attacks and support for terrorism are why Iran’s economy is in shambles.”

Yemen’s Iran-aligned Houthi rebels, at the center of a civil war against Saudi-backed forces, claimed responsibility for the assault on Saudi oil facilities. That declaration was rebuffed by U.S. and Saudi officials, who said the sophistication of the offensive pointed to Iran.

Saudi Arabia was a strategic target.

The kingdom is Iran’s principal regional rival and a petroleum giant whose production is crucial to the world economy. It is an important U.S. security partner. But its war on Yemen, which has killed thousands of civilians, and the brutal murder of Washington-based journalist Jamal Khashoggi by Saudi agents last year, have strained its relations with U.S. lawmakers. There was no groundswell of support in Congress for military intervention to aid the Saudis after the attack.

The 17-minute strike on two Aramco installations by 18 drones and three low-flying missiles revealed the vulnerability of the Saudi oil company, despite billions spent by the kingdom on security. Fires erupted at the company’s Khurais oil installation and at the Abqaiq oil processing facility, the world’s largest.

The attack temporarily halved Saudi Arabia’s oil production and knocked out 5% of the world’s oil supply. Global crude prices spiked.

The assault prompted U.S. Secretary of State Mike Pompeo to accuse Iran of an “act of war.” In the aftermath, Tehran was hit with additional U.S. sanctions. The United States also launched cyber attacks against Iran, U.S. officials told Reuters.

SCOURING TARGETS

The plan by Iranian military leaders to strike Saudi oil installations developed over several months, according to the official close to Iran’s decision making.

“Details were discussed thoroughly in at least five meetings and the final go ahead was given” by early September, the official said.

All of those meetings took place at a secure location inside the southern Tehran compound, three of the officials told Reuters. They said Khamenei, the supreme leader, attended one of the gatherings at his residence, which is also inside that complex.

Other attendees at some of those meetings included Khamenei’s top military advisor, Yahya Rahim-Safavi, and a deputy of Qasem Soleimani, who heads the Revolutionary Guards’ foreign military and clandestine operations, the three officials said. Rahim-Safavi could not be reached for comment.

Among the possible targets initially discussed were a seaport in Saudi Arabia, an airport and U.S. military bases, the official close to Iran’s decision making said. The person would not provide additional details.

Those ideas were ultimately dismissed over concerns about mass casualties that could provoke fierce retaliation by the United States and embolden Israel, potentially pushing the region into war, the four people said.

The official close to Iran’s decision making said the group settled on the plan to attack Saudi Arabia’s oil installations because it could grab big headlines, inflict economic pain on an adversary and still deliver a strong message to Washington.

“Agreement on Aramco was almost reached unanimously,” the official said. “The idea was to display Iran’s deep access and military capabilities.”

The attack was the worst on Middle East oil facilities since Saddam Hussein, the late Iraqi strongman, torched Kuwait’s oil fields during the 1991 Gulf crisis.

U.S. Senator Martha McSally, an Air Force combat veteran and Republican lawmaker who was briefed by U.S. and Saudi officials, and who visited Aramco’s Abqaiq facility days after the attack, said the perpetrators knew precisely where to strike to create as much damage as possible.

“It showed somebody who had a sophisticated understanding of facility operations like theirs, instead of just hitting things off of satellite photos,” she told Reuters. The drones and missiles, she added, “came from Iranian soil, from an Iranian base.”

A Middle East source, who was briefed by a country investigating the attack, said the launch site was the Ahvaz air base in southwest Iran. That account matched those of three U.S. officials and two other people who spoke to Reuters: a Western intelligence official and a Western source based in the Middle East.

Rather than fly directly from Iran to Saudi Arabia over the Gulf, the missiles and drones took different, circuitous paths to the oil installations, part of Iran’s effort to mask its involvement, the people said.

Some of the craft flew over Iraq and Kuwait before landing in Saudi Arabia, according to the Western intelligence source, who said that trajectory provided Iran with plausible deniability.

“That wouldn’t have been the case if missiles and drones had been seen or heard flying into Saudi Arabia over the Gulf from a south flight path” from Iran, the person said.

Revolutionary Guards commanders briefed the supreme leader on the successful operation hours after the attack, according to the official close to the country’s decision making.

Images of fires raging at the Saudi facilities were broadcast worldwide. The country’s stock market swooned. Global oil prices initially surged 20%. Officials at Saudi Aramco gathered in what was referred to internally as the “emergency management room” at the company’s headquarters.

One of the officials who spoke with Reuters said Tehran was delighted with the outcome of the operation: Iran had landed a painful blow on Saudi Arabia and thumbed its nose at the United States.

SIZING UP TRUMP

The Revolutionary Guards and other branches of the Iranian military all ultimately report to Khamenei. The supreme leader has been defiant in response to Trump’s abandonment last year of the Joint Comprehensive Plan of Action, commonly called the Iran nuclear deal.

That 2015 accord with five permanent members of the U.S. Security Council – the United States, Russia, France, China and the United Kingdom – as well as Germany, removed billions of dollars’ worth of sanctions on Iran in exchange for Tehran’s curbing its nuclear program.

Trump’s demand for a better deal has seen Iran launch a two-pronged strategy to win relief from sweeping sanctions reimposed by the United States, penalties that have crippled its oil exports and all but shut it out of the international banking system.

Iranian President Hassan Rouhani has signaled a willingness to meet with American officials on condition that all sanctions be lifted. Simultaneously, Iran is flaunting its military and technical prowess.

In recent months, Iran has shot down a U.S. surveillance drone and seized a British oil tanker in the Strait of Hormuz, the narrow channel through which about a fifth of the world’s oil moves. And it has announced it has amassed stockpiles of enriched uranium in violation of the U.N agreement, part of its vow to restart its nuclear weapons program.

The Aramco attacks were an escalation that came as Trump had been pursuing his long-stated goal of extricating American forces from the Middle East. Just days after announcing an abrupt pullout of U.S. troops in northern Syria, the Trump administration on Oct. 11 said it would send fighter jets, missile-defense weaponry and 2,800 more troops to Saudi Arabia to bolster the kingdom’s defenses.

“Do not strike another sovereign state, do not threaten American interests, American forces, or we will respond,” U.S. Defense Secretary Mark Esper warned Tehran during a press briefing.

Still, Iran appears to have calculated that the Trump administration would not risk an all-out assault that could destabilize the region in the service of protecting Saudi oil, said Ali Vaez, director of the Iran Project at the International Crisis Group, a nonprofit working to end global conflict.

In Iran, “hard-liners have come to believe that Trump is a Twitter tiger,” Vaez said. “As such there is little diplomatic or military cost associated with pushing back.”

The senior Trump administration official disputed the suggestion that Iran’s operation has strengthened its hand in working out a deal for sanctions relief from the United States.

“Iran knows exactly what it needs to do to see sanctions lifted,” the official said.

The administration has said Iran must end support for terrorist groups in the Middle East and submit to tougher terms that would permanently snuff its nuclear ambitions. Iran has said it has no ties to terrorist groups.

Whether Tehran accedes to U.S. demands remains to be seen.

In one of the final meetings held ahead of the Saudi oil attack, another Revolutionary Guards commander was already looking ahead, according to the official close to Iran’s decision making who was briefed on that gathering.

“Rest assured Allah almighty will be with us,” the commander told senior security officials. “Start planning for the next one.”

(Writing by Michael Georgy; Editing by Marla Dickerson)

Iran distances itself further from nuclear deal, alarming Russia, France

Iran distances itself further from nuclear deal, alarming Russia, France
By Parisa Hafezi

DUBAI (Reuters) – Iran has stepped up activity at its underground Fordow nuclear plant, state TV said on Wednesday, a move France said showed for the first time that Tehran explicitly planned to quit a deal with world powers that curbed its disputed nuclear work.

In another development that could also aggravate tensions between Iran and the West, diplomats said Iran briefly held an inspector for the U.N. nuclear watchdog and seized her travel documents, with some describing this as harassment.

The incident involving an International Atomic Energy Agency’s (IAEA) inspector appeared to be the first of its kind since Tehran’s landmark deal with major powers was struck in 2015, imposing restraints on its uranium enrichment program in return for the lifting of international sanctions.

Iran’s decision to inject uranium gas into centrifuges at Fordow, a move that further distances Iran from the accord, was described by Moscow as extremely alarming. Iran once hid Fordow from the IAEA until its exposure by Western spies in 2009.

“With the presence of inspectors from the International Atomic Energy Agency, Iran started injecting (uranium) gas into centrifuges in Fordow,” TV reported.

A central aim of the agreement was to extend the time the Islamic Republic would need to assemble a nuclear weapon, if it chose to do so, to a year from about 2-3 months. Iran has repeatedly denied any such intention.

The 2015 deal bans Fordow from producing nuclear material. But, with feedstock gas entering its centrifuges, the facility – built inside a mountain – will move from the permitted status of research plant to being an active nuclear site.

A spokesman for Iran’s Atomic Energy Organization, Behrouz Kamalvandi, told state TV later that the injection of uranium gas would start at midnight (2030 GMT). He said the centrifuges there would enrich uranium up to 4.5% fissile purity. Ninety percent purity is required for bomb-grade fuel.

President Hassan Rouhani, an architect of the 2015 deal, blamed Washington for Iran’s rolling back of its commitments, saying Fordow would soon fully resume uranium enrichment work.

“Iran’s fourth step in reducing its commitments under the JCPOA (the 2015 nuclear deal) by injecting gas to 1,044 centrifuges begins today. Thanks to U.S. policy and its allies, Fordow will soon be back to full operation,” Rouhani tweeted.

Last year, U.S. President Donald Trump exited the deal, saying it was flawed to Iran’s advantage. Washington has since renewed and intensified sanctions on Iran, slashing its economically vital crude oil sales by more than 80%.

“PROFOUND SHIFT”

Speaking in China, French President Emmanuel Macron called Iran’s latest move “grave”, saying it explicitly signaled Iran’s intent for the first time to leave the deal.

“I think that for the first time, Iran has decided in an explicit and blunt manner to leave the JCPOA, which marks a profound shift,” said Macron, who has been at the forefront of efforts by European signatories to salvage the deal after the United States withdrew.

When asked whether Paris would support triggering a dispute mechanism enshrined in the deal, Macron said technical and ministerial meetings would be held to discuss the wider implications of Iran’s actions.

In Moscow, Russian Foreign Minister Sergei Lavrov said events unfolding around the nuclear deal were deeply disturbing and called on Iran to stick to the terms of the deal.

But he added that Moscow understood why Tehran was cutting back on its commitments, and blamed the situation on the U.S. decision to pull out of the pact.

Responding to Washington’s “maximum pressure” policy, Iran has bypassed the restrictions of the deal step-by-step – including by breaching both its cap on stockpiled enriched uranium and on the fissile level of enrichment.

“Iran has taken its fourth step to decrease its nuclear commitments to the deal in reaction to the increased U.S. pressure and inactivity of European parties to the deal to save it,” Iranian state TV added.

SPEEDING UP ENRICHMENT

In Vienna, the U.N. nuclear watchdog said IAEA inspectors remained on the ground in Iran and would report back on relevant activities.

Iranian authorities said on Tuesday that Tehran will enrich uranium to 5% at Fordow, which will further complicate the chances of saving an accord that European powers, Russia and the European Union have urged Iran to respect.

The agreement capped the level of purity to which Iran can enrich uranium at 3.67% – suitable for civilian power generation and far below the 90% threshold of nuclear weapons grade.

On Monday, Iran said it had accelerated enrichment by doubling the number of advanced IR-6 centrifuges in operation, adding that it was working on “a prototype called the IR-9, which works 50 times faster than IR-1 centrifuges”.

The deal, under which international sanctions against Iran were lifted, was tailored to extend the “breakout time” – how long Iran would need to accumulate enough fissile material for a nuclear bomb.

Iran has given another two-month deadline to Britain, France and Germany to salvage the deal. Leaving room for diplomacy, Tehran says talks are possible if Washington lifts all the sanctions and itself returns to the nuclear deal.

The incident involving the IAEA inspector is due to be discussed at a meeting of the agency’s 35-nation Board of Governors on Thursday convened at short notice to discuss “two safeguards matters” not specified in the agenda.

“The agency wants to show how seriously they are taking this. It is a potentially damaging precedent,” one Western official said. An IAEA spokesman and Iran’s ambassador to the U.N. watchdog declined to comment.

(Additional reporting by Marine Pennetier, Maria Kiselyova, Francois Murphy and John Irish; Writing by Parisa Hafezi; Editing by William Maclean and Mark Heinrich)

Iran develops advanced machines to speed up enrichment: official

Iran develops advanced machines to speed up enrichment: official
By Parisa Hafezi

DUBAI (Reuters) – Iran said on Monday it would take another step away from the 2015 nuclear deal by developing centrifuges to speed up its uranium enrichment, its nuclear chief Ali Akbar Salehi said.

“Today, we are witnessing the launch of the array of 30 IR-6 centrifuges,” Salehi, who heads Iran’s Atomic Energy Organization, told state television. “Iran now is operating 60 IR-6 advanced centrifuges. It shows our capacity and determination.”

Under the agreement between Iran and world powers, Tehran is only allowed to enrich uranium with just over 5,000 of its first-generation IR-1 centrifuges. An IR-6 centrifuge can enrich uranium 10 times faster than the IR-1s.

“Our scientists are working on a prototype called the IR-9, that works 50 times faster than the IR-1s,” Salehi said.

The deal was aimed at extending the time Iran would need to obtain enough fissile material for a nuclear bomb, if it sought one – something sometimes referred to as “breakout time” to about a year from 2-3 months. Iran denies ever having sought to build a nuclear bomb.

The U.N. nuclear watchdog said in September that Iran had informed the agency about making modifications to accommodate cascades – or interconnected clusters – of 164 of the IR-2m and IR-4 centrifuge. Cascades of the same size and type were scrapped under the deal.

Tensions have risen between Tehran and Washington since last year when U.S. President Donald Trump withdrew from the accord under which Iran had agreed to rein in its nuclear program in exchange for relief from economic sanctions.

The United States has since renewed and intensified its sanctions, slashing Iran’s crude oil sales by more than 80%.

Responding to Washington’s “maximum pressure”, Iran has breached the restrictions of the deal step-by-step and has rejected the United States’ demand that a far-reaching deal should be negotiated.

Tehran, however, has left room for diplomacy by saying that talks are possible if Washington lifts all the sanctions and returns to the nuclear deal.

Iran has said it might take further steps in November if European parties to the pact fail to shield its economy from U.S. penalties.

While steps taken by Iran so far do not make a big difference to that breakout time for now, it further complicates the prospects of saving the accord by the European parties to the deal, who have criticized Trump for exiting it.

(Additional reporting by John Irish in Paris; Writing by Parisa Hafezi, Editing by Angus MacSwan)

Iranian president says U.S. offered to remove all sanctions on Iran in exchange for talks

FILE PHOTO: Iranian President Hassan Rouhani gestures at the conclusion of his address to the 69th United Nations General Assembly at the United Nations Headquarters in New York, September 25, 2014. REUTERS/Mike Segar/File Photo

By Babak Dehghanpisheh

GENEVA (Reuters) – The United States offered to remove all sanctions on Iran in exchange for talks but Tehran has not yet accepted the offer due to the current “toxic atmosphere”, Iranian President Hassan Rouhani said on Friday.

Rouhani, speaking on his return from the United Nations General Assembly in New York, said he met there with U.S. officials at the insistence of Germany, Britain and France.

“It was up for debate what sanctions will be lifted and they (the United States) had said clearly that we will lift all sanctions,” Rouhani said, according to his official website.

Iran was ready for negotiations but not in an atmosphere of sanctions and pressure, the Iranian president said.

“This action wasn’t in a manner that was acceptable, meaning that in the atmosphere of sanctions and the existence of sanctions and the toxic atmosphere of maximum pressure, even if we want to negotiate with the Americans in the 5+1 framework, no one can predict what the end and result of this negotiation will be,” he said.

Crude slipped on the report, adding to earlier losses caused by a faster-than-expected recovery in Saudi output, slowing Chinese economic growth, a Wall Street Journal report saying that Saudi Arabia had agreed a partial ceasefire in Yemen. Brent crude was trading below $62 a barrel. [O/R]

Rouhani did not meet U.S. President Donald Trump in New York and European and Gulf officials expect Washington to keep tightening the vice on Iran’s economy.

The United States and Iran are at odds over a host of issues, including the U.S. withdrawal from the 2015 Iran nuclear deal, U.S. accusations – denied by Tehran – that Iran attacked two Saudi oil facilities on Sept. 14, and Iran’s detention of U.S. citizens on what the United States regards as spurious grounds.

(Reporting by Babak Dehghanpisheh; Editing by Angus MacSwan)

Netanyahu: Iran had secret nuclear weapons development site in Abadeh

Israeli Prime Minister Benjamin Netanyahu speaks at a news conference in Jerusalem September 9, 2019. REUTERS/Ronen Zvulun

JERUSALEM (Reuters) – Israeli Prime Minister Benjamin Netanyahu said on Monday that Iran had been developing nuclear weapons at a secret site near the city of Abadeh, but that Tehran destroyed the facility after learning it had been exposed.

It was the first time Netanyahu had identified the site, which, he said, was discovered in a trove of Iranian documents Israel previously obtained and disclosed last year.

“In this site, Iran conducted experiments to develop nuclear weapons,” Netanyahu said in broadcast remarks, showing an aerial picture of several small buildings, including their coordinates, that he said were taken at the Abadeh facility late in June 2019.

“When Iran realized that we uncovered the site, here’s what they did,” he said, showing a picture from a month later in which the buildings no longer appeared. “They destroyed the site. They just wiped it out.”

Netanyahu’s comments followed a Reuters report revealing that the International Atomic Energy Agency found traces of uranium at a different site in Iran that the Israeli leader had first pointed to during a speech last year at the United Nations.

Iran had yet to explain the traces of uranium at that site, though it denies ever having sought a nuclear weapon.

Netanyahu, who strongly opposed a 2015 nuclear deal between Iran and world powers, made the remarks in a televised speech about a week before a general election in Israel in which he is in a tight race to win another term.

“I call on the international community to wake up, to realize that Iran is systematically lying,” Netanyahu said.

“The only way to stop Iran’s march to the bomb, and its aggression in the region, is pressure, pressure and more pressure.”

(Reporting by Ari Rabinovitch,; Editing by Stephen Farrell and Jonathan Oatis)

U.S. unsure about circumstances of tanker towed to Iran

FILE PHOTO: A British Royal Navy patrol vessel guards the oil supertanker Grace 1, that's on suspicion of carrying Iranian crude oil to Syria, as it sits anchored in waters of the British overseas territory of Gibraltar, historically claimed by Spain, July 4, 2019. REUTERS/Jon Nazca

DUBAI (Reuters) – U.S. officials say they are unsure whether an oil tanker towed into Iranian waters was seized by Iran or rescued after facing mechanical faults as Tehran asserts, creating a mystery at sea at a time of high tension in the Gulf.

The MT Riah disappeared from ship tracking maps when its transponder was switched off in the Strait of Hormuz on July 14. Its last position was off the coast of the Iranian island of Qeshm in the strait.

Iran says it towed a vessel into its waters from the strait after the ship issued a distress call. Although Tehran did not name the vessel, the Riah is the only ship whose recorded movements appear likely to match that description.

A U.S. official, speaking on the condition of anonymity, said it appeared that the tanker was in Iranian territorial waters, but it was not clear whether that was because Iran had seized it or rescued it.

The mystery comes at a time when Washington has called for greater security for ships in the Gulf.

Iran has threatened to retaliate for the British seizure of an Iranian oil tanker accused of violating sanctions on Syria. Iran’s Supreme Leader Ayatollah Ali Khamenei has branded the British action “piracy”.

The United States has also blamed Iran for attacks on tankers in the Gulf since May, which Tehran denies.

Shipping experts say U.S. sanctions on Iran intended to halt its oil exports have led to a rise in unusual tanker movements away from shipping lanes, with Iran seeking covert ways to export its oil. Increasingly, ships are switching off location transponders, transferring oil at sea and concealing their routes. Iran has also become more dependent on a fleet of aging ships, and some have had to be towed for emergency repairs.

Adding to the riddle of the missing ship was difficulty establishing who owns it, which no country or company has so far publicly claimed. Initial reports described it as Emirati. However, an Emirati official told Reuters the tanker was neither owned nor operated by the UAE.

The tanker’s registered manager is Prime Tankers in the UAE. That company told Reuters it had sold the tanker to another UAE-based company, Mouj al-Bahar. An employee at Mouj al-Bahar told Reuters that the firm did not own it but had been managing the vessel up to two months ago, and that it was now under the management of a company called KRB Petrochem. Reuters could not reach KRB Petrochem for comment.

(Reporting by Dubai newsroom, Parisa Hafezi, Ghaida Ghantous and Alex Cornwell; Writing by Lisa Barrington; Editing by Peter Graff)

Netanyahu says Trump knew in advance of Israel’s Iran archive mission

FILE PHOTO: Israeli Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting in Jerusalem, June 30, 2019. Oded Balilty/Pool via REUTERS/File Photo

JERUSALEM (Reuters) – Israeli Prime Minister Benjamin Netanyahu said on Tuesday that he informed U.S. President Donald Trump in advance of what Israel has described as a spy mission in Tehran last year to capture a secret Iranian nuclear archive.

Netanyahu said in April 2018 that Mossad operatives had spirited thousands of hidden documents out of Tehran that proved Iran had previously pursued a nuclear weapons program. Trump cited the Israeli findings in his decision, a month later, to quit a 2015 deal that had scaled down Iran’s nuclear project.

Iran denies ever seeking nuclear weapons and has accused Israel of faking the Tehran mission and documents trove.

Awarding an Israeli national security prize on Tuesday to the Mossad team credited with the so-called “Atomic Archive” capture, Netanyahu said he had discussed the planned operation with Trump when they met at the Davos forum in January 2018.

“He asked me if it was dangerous. I told him that there was a danger to it that was not negligible, but that the outcome justified the risk,” Netanyahu said at the closed-door ceremony, according to a transcript issued by his office.

Netanyahu said that, when he later presented main findings from an Israeli analysis of the documents to Trump at the White House, the president “voiced his appreciation for the boldness”.

“I have no doubt that this helped to validate his decision to withdraw from this dangerous (Iran nuclear) deal,” he said.

With the United States having reimposed sanctions on Iran, tensions have been soaring in the Gulf in recent weeks.

Mossad officials have said the Tehran mission took place in February 2018, but have not given details on how the documents were brought out to Israel.

Six Mossad officers – four men and two women – received Tuesday’s prize for leading the mission, which also involved “hundreds” of others, the intelligence agency’s director, Joseph (Yossi) Cohen, told an international security forum this week.

(Writing by Dan Williams; Editing by Mark Heinrich)

Trump blames Iran for tanker attacks, stoking fears of confrontation

Still image taken from a video appears to show two tankers at sea, one of which has a large plume of dark smoke in the Gulf of Oman. PRESS TV/IRIB/via REUTERS

By Parisa Hafezi and Makini Brice

DUBAI/WASHINGTON (Reuters) – U.S. President Donald Trump blamed Iran on Friday for attacks on two oil tankers at the entrance to the Gulf despite Tehran’s denials, stoking fears of a confrontation in the vital oil shipping route.

Iran has dismissed earlier U.S. charges that it was behind Thursday’s attacks that crippled two tankers. It has previously suggested it could block the Strait of Hormuz, the main route out for Middle Eastern oil, if its own exports were halted.

Thursday’s blasts followed similar attacks a month earlier on four tankers, which Washington also blamed on Tehran.

They come at a time of escalating confrontation between the United States and Iran. Last month Washington sharply tightened sanctions against Tehran, which in response has threatened to step up its nuclear activity.

Asked how he planned to address Tehran and prevent any further incidents, Trump told Fox News: “We’re going to see.” He also said that any move to close the Strait of Hormuz would not last long.

Nevertheless, Trump, who last year pulled the United States out of an agreement between world powers and Tehran to curb Iran’s nuclear program in return for the lifting of sanctions, said that he was open to negotiations with Iran.

“We want to get them back to the table,” Trump said. “I’m ready when they are.” He added that he was in “no rush”.

Iran has repeatedly said it will not re-enter talks with the United States unless it reverses Trump’s decision to withdraw from the nuclear deal.

The U.S. military released a video on Thursday it said showed Iran’s Revolutionary Guards were behind the blasts that struck the Norwegian-owned Front Altair and the Japanese-owned Kokuka Courageous in the Gulf of Oman, at the mouth of the Gulf.

Iran said the video proved nothing and that it was being made into a scapegoat.

“These accusations are alarming,” Foreign Ministry spokesman Abbas Mousavi said.

Iran has accused the United States and its regional allies such as Saudi Arabia and the United Arab Emirates of “warmongering” by making accusations against it.

Tehran and Washington have both said they have no interest in starting a war. But this has done little to assuage concerns that the two arch-foes could stumble into a conflict.

Oil prices surged on Thursday, reflecting the jitters, although they have since given up some of those gains.

U.N. Secretary-General Antonio Guterres told the U.N. Security Council on Thursday the world could not afford “a major confrontation in the Gulf region”.

China, the European Union and others have called for restraint from all sides. In a notable signal that close U.S. allies are wary of Washington’s position, Germany said the U.S. video was not enough to apportion blame for Thursday’s attack.

The U.S. military said black-and-white footage it filmed from a U.S. aircraft showed Iran’s Guards on one of their patrol boats drawing up to the Kokuka Courageous and removing an unexploded limpet mine from its hull.

Britain said it took the matter “extremely seriously” and, if Iran was involved, “it is a deeply unwise escalation”.

The Japanese-owned tanker, abandoned by its crew, was being towed to a port in the United Arab Emirates on Friday, after a Dutch firm said it had been appointed to salvage the ships.

The second tanker, the Front Altair, which was set ablaze by a blast, was still languishing at sea, although the fire that had charred the hull had been put out.

“ALARMING”

Last month Washington revoked waivers that had allowed some countries to continue importing Iranian oil, effectively ordering all countries to blacklist Iran or face sanctions themselves.

Iran’s crude exports fell to about 400,000 barrels per day (bpd) in May from 2.5 million bpd in April 2018, starving Iran’s economy of its main source of revenues.

Iran says it is still abiding by the terms of the nuclear deal, but cannot do so indefinitely unless it receives some of the economic benefits that were promised. Last month it said it would boost enrichment of uranium, a move that could potentially lead to it building up a stockpile prohibited under the deal.

Washington has also blamed Iran or its proxies for attacks on May 12 that crippled four oil tankers in the same area, and has said Tehran was behind May 14 drone strikes on two Saudi oil-pumping stations. Tehran has denied all those charges.

There have been conflicting accounts of the cause of Thursday’s blasts. An initial report that Kokuka Courageous was struck by a torpedo was dismissed by a source familiar with the issue. The owner of the tanker, which carried methanol, later said it was hit by two “flying objects”.

A source has said a magnetic mine could have caused the explosion on Front Altair, which had a cargo of naphtha.

“UNWISE ESCALATION”

Iranian TV showed 23 crew in Iran believed to be from Front Altair on Friday, and said its experts would assess whether they could return to the ship. The crew from Kokuka Courageous were picked up and handed to a U.S. Navy ship on Thursday.

The Trump administration said in May it would send troops and other forces to the Middle East, citing Iranian threats, a move Tehran has called “psychological warfare”.

The administration argues that the nuclear deal, negotiated under Trump’s predecessor Barack Obama, was too limited, and says re-imposing sanctions will force Tehran back to the table to make more concessions.

Most U.S. allies in Europe and Asia disagree and say pulling out of the deal was a mistake that will empower hardliners in Iran and hurt the pragmatic faction that promised Iranians economic benefits in return for opening up to the world.

Thursday’s attack took place while Prime Minister Shinzo Abe of Japan – a big buyer of Iranian oil until it was forced by the new U.S. sanctions to stop – was visiting Tehran on a peacemaking mission, bringing a message from Trump.

Iran dismissed Trump’s message, details of which were not made public. “I do not see Trump as worthy of any message exchange, and I do not have any reply for him, now or in future,” Iranian Supreme Leader Ali Khamenei said.

(Reporting by Parisa Hafez, Maher Chmaytelli and Ghaida Ghantous in Dubai, Makini Brice, Susan Heavey, Phil Stewart and Lesley Wroughton in Washington; Bart Meijer in Amsterdam; Victoria Klesty in Oslo; Writing by Edmund Blair and Peter Graff; Editing by Janet Lawrence and Gareth Jones)