US-Iran Nuclear Talks Stall as Fighting Rages On in Lebanon

(Bloomberg) — Fighting between Israel and Hezbollah continued unabated in southern Lebanon, casting fresh uncertainty over planned talks between the US and Iran to permanently end the war in the Middle East and curb Tehran’s nuclear program.

Iran postponed negotiations that were meant to begin in Switzerland on Friday because of the ongoing fighting, according to two people familiar with the situation, who asked not to be identified due to the sensitivity of the matter.

Although Israel and Hezbollah agreed to a ceasefire after heavy clashes on Friday, according to a US official, who also asked to remain anonymous because the agreement isn’t public, reports of violence persisted.

The Lebanese army said in a post on X on Saturday that Israel had attacked the south of the country and the Bekaa valley, causing fatalities, injuries and extensive destruction of property. Lebanon’s state-run National News Agency said five people were killed around the southern town of Nabatieh.

The Israel Defense Forces said it had struck Hezbollah targets after the group launched more than 50 projectiles at its forces in southern Lebanon overnight, according to an official who spoke on condition of anonymity in line with the military’s policy.

Iran insisted that an interim peace deal finalized with the US this week include an end to Israeli military action in Lebanon, and didn’t send a delegation to Switzerland due to the fresh hostilities. While US Vice President JD Vance also didn’t travel, Axios reported US Special Envoy Steve Witkoff was going.

“The Lebanon front is unlikely to collapse the US-Iran agreement at this stage,” said Bilal Bassiouni, head of risk forecasting at advisory firm Pangea-Risk. “Iran is delaying the Switzerland talks to force the US to restrain Israel, since accepting continued strikes in Lebanon would weaken Iran’s leverage.”

There’s as yet no indication of a new start date for the talks, although Switzerland’s foreign ministry said preparatory work at the host resort of Bürgenstock is continuing and a White House spokesperson said an American delegation is prepared to depart at the first available opportunity.

The postponement is a blow to US President Donald Trump, who signed a memorandum of understanding with his Iranian counterpart Masoud Pezeshkian despite criticism he was conceding too much in terms of financial benefits and relief from sanctions. He said the agreement would prevent a global economic crisis, given the critical Strait of Hormuz would reopen to oil and gas shipments.

Iran has been “completely defeated militarily,” Trump posted on Truth Social on Saturday. “Iran got away with ‘murder’ for 47 years, until I came along. Then it all changed.”

On Friday, he said the two sides still have time to make a deal.

“Otherwise, we will do things that won’t make them happy, but I don’t think it’s going to get to that,” he said in remarks at Joint Base Andrews, where he was unveiling the new Qatar-gifted jet that will serve as Air Force One.

The US is working with Qatar on a plan to give Iran access to the spending power of some of its estimated $100 billion in cash that’s been locked up by sanctions, beginning with $6 billion held in Qatar, an early financial incentive to end the war, the Wall Street Journal reported, citing people familiar with the matter. Under that deal, which isn’t yet completed, Qatar would allow food and other humanitarian goods ordered by Iran’s central bank to be bought with money drawn from frozen Iranian assets, the newspaper said.

It’s not yet clear how the latest developments in Lebanon will affect the Hormuz strait. Traffic through the key waterway appeared to thin early Friday, a day after it surged following an agreement between the two countries to lift a dual blockade.

On Friday, Iran said ships will need its permission to cross the strait, setting the stage for a likely contentious debate over future tolling arrangements. The US, Europe and Gulf Arab states have balked at the idea of Tehran imposing fees.

Oil rose slightly on Friday, with Brent up about 0.9% to $80 per barrel. Prices dropped about 7.7% this week, with traders anticipating the reopening of Hormuz strait will ease the biggest energy-supply crunch in history, but remain roughly 30% higher for the year because it will take months for flows to return to normal.

The war in the Middle East erupted when the US and Israel launched air strikes on Iran on Feb. 28. The Islamic Republic struck back, firing missiles and drones at Israel and nations across the Gulf, and thousands of people were killed.

While the US and Iran agreed a temporary truce in early April, conflict in Lebanon has continued. The Israeli military said four of its soldiers, including a battalion commander, were killed on Friday. Israel’s attacks killed 18 people the same day, Lebanon’s National News Agency said, while the Israeli military said it targeted 80 Hezbollah sites.

The Lebanese health ministry put the Friday death toll at 47, and President Joseph Aoun said the latest Israeli escalation is undermining the ceasefire efforts.

Strains between the US and Israel over Lebanon are growing. Trump has sworn at Israeli Prime Minister Benjamin Netanyahu in calls, accusing him of almost scuppering the memorandum with Iran by escalating strikes. Israel insists it will keep troops across its borders until it’s sure Hezbollah, designated a terrorist organization by the US, is no longer a threat.

“Lebanon is not an enemy of Israel,” Ella Waweya, a spokesperson for Israel’s military, said in a post on X. “The problem is Hezbollah, which drags Lebanon into destruction time and time again, depriving the Lebanese people of stability, security, and prosperity.”

A poll aired on Israel’s top-rated Channel 12 TV showed 67% of Israelis see the US-Iran deal as bad for their country, 9% see it as good and the remainder are undecided.

The US-Iran memorandum led to Washington lifting a naval blockade of Iranian ports and Iran saying it will reopen the Hormuz strait. They have agreed to extend their ceasefire during the new round of talks, which are meant to finish within 60 days but can be extended.

The US and Israel say they attacked Iran to stop it from building an atomic weapon. Tehran has long denied wanting to do that, but has enriched uranium to far beyond the levels needed for nuclear power plants.

The sides will try to agree on restricting Iran’s processing of the fuel, possibly for a decade or more, and destroying or diluting its existing stocks of highly enriched uranium. Many atomic experts say 60 days is insufficient to work out a permanent deal with Iran, given the complex and technical nature of the topic.

–With assistance from Golnar Motevalli, Kate Sullivan, Jennifer A. Dlouhy and Sara Gharaibeh.

(Updates with analyst comment in seventh paragraph, report on plan to give Iran access to funds in 13th.)

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