Vance reaches out to Iran's Rezaei as Trump weighs new strikes

For oil, the report highlights a two-way risk ahead of next week's midterms. A credible negotiating channel would be the first sign in months that shipping through the Strait of Hormuz could eventually be restored, which would reduce the supply premium. However, the discussions cover only a framework, and Trump continues to signal possible strikes. This leaves the market vulnerable to a sharp upside move if talks collapse and an attack occurs. Rezaei's recent threats against the UAE add another layer of Gulf supply risk, so traders are likely to keep buying protection until Trump's decision becomes clear.

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Washington is engaging Tehran's hard-liners behind the scenes while publicly threatening war, and the oil market must account for both realities.

Summary:

• Vance wrote to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, reportedly on Trump's orders
• The goal is to find enough common ground to prevent Trump from ordering a short, intense strike in the coming weeks
• Talks have centered on a negotiating framework rather than specific terms, and Rezaei insists core demands must be met first
• Trump has publicly denied negotiations and says he expects a return to war after the midterms
• A June memorandum of understanding collapsed over Strait of Hormuz shipping, and talks through Qatar and Pakistan remain stalled
• The US blockade of Iranian ports is ongoing, and oil flows through Hormuz have not been enough to ease high energy prices

US Vice President JD Vance has sent a letter to one of Iran's most influential hard-liners in an effort to restart stalled peace talks, even as President Donald Trump hints that war could resume after next week's midterm elections, the Wall Street Journal (gated) reported, citing US officials and people familiar with the matter.

According to the report, Vance's letter was addressed to Mohsen Rezaei, secretary of Iran's Supreme National Security Council and formerly the longest-serving commander of the Islamic Revolutionary Guard Corps. One source said the letter was sent at Trump's direction, and the president is aware of the outreach. The goal is to assess whether there is enough common ground to persuade Trump not to order a short, intense strike on Iran in the coming weeks.

So far, the contacts have focused on a possible framework for talks rather than the specifics of a peace plan. Rezaei said last week that Tehran would not negotiate until certain core demands are met. Some US officials believe that engaging the hard-liners, who have gained influence since US and Israeli strikes killed regime leaders at the start of the war, could lead to a better diplomatic outcome.

The outreach contrasts sharply with Trump's public posture. Last week he said Washington was not negotiating with Iran and suggested strikes were imminent, and on the campaign trail he has said he expects a return to war. On Tuesday he accused Tehran of stalling, possibly hoping for an election result that he said would not help it.

Diplomacy has repeatedly failed. A memorandum of understanding reached in June fell apart within two weeks due to differing views on how to reopen shipping in the Strait of Hormuz. Talks mediated by Qatar and Pakistan remain deadlocked, with Washington demanding upfront nuclear concessions and Tehran insisting on immediate economic relief. A US blockade of Iranian ports remains in place, and although some oil continues to move through the strait, the flows have not been enough to lower high energy prices.

Rezaei has adopted a hawkish stance, warning earlier this month that Iran could strike the United Arab Emirates as well as data centres and internet cables across the region. On Sunday, however, he met security chiefs from Saudi Arabia, Pakistan and Turkey in Tehran as all sides sought de-escalation. Foreign Minister Abbas Araghchi said Iran remained ready to defend itself but was still giving diplomacy a chance.

The political stakes are high in Washington as well. Republicans are bracing for losses in Congress, with voters citing the war and rising fuel costs, and Vance is the early front-runner for the party's 2028 presidential nomination. Whether this channel can produce a framework before Trump makes a final decision on strikes is now the key question for both the conflict and energy markets.