Report says Iran accepted secret inspections of nuclear sites

Al Araby Al Jadeed reports that a “compromise proposal” has been put before Washington and Tehran by Qatar and Pakistan, with the package said to meet the demands of both sides. The plan, handed to Iranian officials today by Pakistan’s army chief, is reported to already have American sign-off and some prior Iranian approval.

The terms in the report are:

• The $6 billion in interest on Iranian funds frozen in Qatari banks would be paid out
• Iran’s demand for the return of frozen funds would be met with a “partial response”
• The IAEA would conduct a secret visit to Iranian nuclear sites, which is one of Washington’s demands
• A framework would be set up to prevent a return to escalation and to restart negotiations

Citing a source, the publication expects an announcement this week of a breakthrough that would end the escalation between Washington and Tehran. The outstanding points of disagreement are still being narrowed by mediators.

The market has shown only a modest reaction, with crude down about $1 a barrel in the half-hour after the news broke. Given the questionable source, traders are staying cautious about trading on Iran headlines generally.

Even so, the proposal is an inventive one. By paying interest rather than principal, both sides can present it as a victory. Iran receives cash, while the US can insist the principal remains frozen. A quiet IAEA visit is exactly the type of face-saving inspection needed before any broader move, even if the immediate leak of a supposedly secret visit is unlikely to inspire trust. If Pakistan’s army chief is personally delivering the document, then the effort is being taken seriously at a high level.

For oil prices, a genuine de-escalation would reduce some of the risk premium tied to Hormuz and the surrounding region. Official statements from Washington, Tehran or Doha are worth monitoring, although the process is likely to be slow either way. With WTI above $100 and Brent above $110, the US has obvious reasons to pursue an agreement before the Nov 3 midterms.