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As oil prices fell on hopes for an end to this fighting and in the U.S. stocks surged close to records set in January. Now meanwhile in Washington the first direct talks in decades between the Israeli and Lebanese ambassadors to the U.S. concluded on a productive note Tuesday. That's according to the U.S. State Department. An initial round of talks held last weekend though in Pakistan aimed at permanently ending the U.S.-Iran conflict failed to produce an agreement. Now President Trump saying that this war could be coming to a close shortly here. I want to play out this soundbite from Fox Business. I had to divert because if I didn't do that right now you would have Iran with a nuclear weapon and if they had a nuclear weapon you would be calling everybody over there sir and you don't want to do that. Well you keep saying was is this war over? I think it's close to over yeah. I mean I view it as very close to over. You know what if I pulled up stakes right now it would take them 20 years to rebuild that country and we're not finished. We'll see what happens. I think they want to make a deal very badly. That was a post there from President Trump. My producer is actually just flagging for me here. This is a new truth social that the White House just shared from President Trump saying China is very happy that I'm permanently opening the Strait of Hormuz. I'm doing it for them also and the world. This situation will never happen again. They have agreed not to send weapons to Iran. All right joining us now is Jonathan Sayeed with the Foundation for Defense of Democracies. Thank you so much for taking the time as always to break this all down for us. Hi Christy it's great to be with you again. Let's just start with this news that just came out from the White House. That post there from President Trump speaking on the Strait of Hormuz. What's initial reaction to that? Well it's no surprise that ultimately China wants the goods to the supply chain to still flow through the Strait. Even though when we talk about the Strait being closed or open we should not be looking at it in black and white terms. This is something that Tehran was dictating as to who gets to pass and Chinese vessels were allowed to cross. But that said that doesn't mean the supply chain as a whole was resolved which is ultimately something that China prefers for it to be open. Frankly most countries in the world are still implicated by these economic challenges so that's that's not necessarily a surprise. But let's see how effective this blockade will be because the key term with any economic pressure whether it's going to be sanctions or this naval blockade is persistence. If the idea is for us to somehow build leverage then it's going to take time. So that's going to be a bit challenging to want to end the war really soon but at the same time be tapping into tools that are really for a long term strategy. But we we have to wait and see whether the administration is simply trying to build leverage for talks or they're just using this blockade to deprive the regime of cash flow to maybe tap into something internal. Might want to deprive the repression apparatus and the military establishment from a salary so they can get some internal fractures. We have to wait and see. And as we're taking a live look there at the Strait of Hormuz, President Trump saying he's permanently opening the Strait. Really when we're talking about oil prices and what we can expect going forward over the next coming days or weeks here as now people are getting excited that talks may resume. What can we expect to see out of the Strait of Hormuz here? Of course markets are going to react to perception more than what's really the facts on the ground. Still some Iranian vessels were able to allegedly pass the blockade. Again none of it is necessarily confirmed and it doesn't specify what vessels they were nor did it say which ports they eventually used. But for this blockade to be also long term and parallel strategy needs to be some sort of a humanitarian channel because Iran still relies heavily on food, grains and different material that it imports, medicine as well. So we need to ensure that we don't let the regime win the PR battle. We want to ensure that similar with the maximum pressure campaign it is very clear for the world to see that our blockade is specifically against Iranian illicit oil exports, arm exports and imports and it's not there to target the average Iranian. That's very critical. But when we talk about any form of economic pressure on a regime and similar conditions here also apply. Now I also wanted to ask about this with both sides signaling an in-principle agreement which is what it's being called here to extend the ceasefire. How real is the momentum towards a lasting deal this time? So I think we heard that the sticking point again is Iran's nuclear ambitions and on the surface it seems like there's a compromise. On one hand Washington says halt enrichment for 20 years then Tehran's rebuttal was let's say five or ten years. But the issue with that is similar with the JCPOA. We haven't heard the details meaning we don't know what the halt to enrichment means. Are they going to give up all their centrifuges or are they simply going to just temporarily put them out of order? And that was the challenge with the JCPOA. They still maintain a lot of their centrifuges. They still in theory were able to have a close breakout period. If this is going to be the same situation where Iran doesn't give up most of its centrifuges then that begs the question how is it going to be any better or reliable than the JCPOA. The issue with Iranian enrichment is not simply the fact that it's getting postponed let's say even 100 years. It's about what capability the regime possesses. So that is not a simple sticking point I would say and on top of that you have two more lingering issues that were never part of conversation to begin with such as the Strait of Hormuz being won or Iran asking for somehow a compensation for war that it effectively instigated by weaponization. So you see this ambitious regime that is now demanding stuff that has never demanded before. Because of those I don't see this being as probable as what we might think but that said we should reach the point that maybe two sides would benefit from a longer ceasefire. Iran wants to project an image of calm domestically and so does Trump with the market. So we have to wait and see but extension of the ceasefire does not necessarily translate to success in talks. Let's stay on that because that was going to be my next question to you here is those three sticking points which is as you said Iran's nuclear program the Strait of Hormuz and war compensation. Of those three really what is the most difficult one to resolve? What's that one point that we're going to see really be coming back and forth here in these talks these negotiations? I hate to admit that it might be all three of them. So starting with the most dare I say bizarre or outrageous one would be the demands for compensation. That is probably Tehran's way of demanding some sort of a short-term sanction waiver or sanctions relief. Instead of calling it a removal of sanctions they might be calling it a compensation because their economy is desperate for cash flow. They need to rebuild their missiles that they've depleted. They need to build launchers. They need to artificially inject the market with some sort of currency to at least get rid of a bit of the inflation there. That's one and the nuclear issue has always been lingering and it's frankly I think of you know the negotiations that Tehran had with the Bush administration. Then centrifuges and enrichment were an issue then all the way and now we're like decades later we're still struggling to find an avenue there. And what Obama did is he provided enough concessions on that allowed Tehran to maintain the enrichment capability. Trump has seen that as a red line. That's going to be of course the main sticking point. Now getting to the Strait of Hormuz I do think Tehran is now getting more ambitious with demanding that ships pay toll. I think some of their regime officials were comparing this to the Panama situation with a stark difference being Panama's not attacking vessels with drones and missiles and it's not ran by an FTO similar to the IRGC in Tehran. So no matter what angle you look at they all look really challenging. Tehran's demands continue to be maximalist. They know Trump wants to conclude this war soon so they're really putting everything on the table and demanding all of it. We know those talks last weekend in Pakistan failed to produce an agreement so President Trump as I just shared that soundbite with our viewers they're saying that these talks set to resume within the next coming days but given what we saw just so recently without those talks really going anywhere what is going on behind the scenes as we lead up to potentially another round of these conversations? I don't think the expectation was for the first round of talks to necessarily produce anything that concrete or written. Negotiations especially with two sides that are at war is certainly going to going to take time. So the first one or two stages really need to provide enough of a framework for them to work off of and what we saw with the first announcement there was a major contradiction between what Tehran said versus what Trump announced when he mentioned there was going to be a ceasefire. Tehran was effectively stating that United States had agreed to all of its 10 demands. We know that's not the case and you have to wonder really what they were negotiating over to your point as to behind the scenes were they not able to even have a baseline understanding as to what are the main principles that they're going to be negotiating over or not. We didn't see that and you have to look at the rhetoric coming from Washington after the first negotiations led by J.D. Vance being the third person in the Trump administration that's talking to Tehran. First we had Wyckoff, Kushner and now J.D. Vance and you see the same tone coming from all these three officials. They first enter negotiations with optimism willing to provide some sort of a compromise then they return slightly disappointed but while maintaining some sort of a positive open and public diplomatic messaging saying we're still optimistic. We've seen this play out time and time again. I have not seen any indication that would make me think the talks that were led in Pakistan were any different than the talks in Rome or Amman. I also wanted to ask you this so these talks are reportedly being mediated through countries like Pakistan, Saudi Arabia. How critical are these intermediaries when it comes to getting a deal done and why them? It is critical for them and frankly when I look at the region, Oman put in the most amount of effort and was effectively left out of this latest ceasefire talks. I can't imagine they're happy about it but that said comes down to Pakistan here in this context. Of course we always call the Islamic Republic of Iran the true Islamic Republic whereas in reality Pakistan is also an Islamic Republic. They have an incentive to keep the regime afloat. You're talking about a Shia versus Sunni Islamist ideology. You look at how Pakistan has operated as a quote-unquote ally by housing Osama and now they are more or less liaising with the regime in Tehran. Pakistan's role is critical but that said they're benefiting from it the most which is why they have these ambitions that they do but ultimately no matter what mediator you have there it comes down to how much the two sides are willing to compromise. I can't imagine any Pakistani official being able to convince Iranians to give up enrichment or being able to convince the U.S. administration to give up its red line of enrichment. So when it comes to these core sticking points, mediators can only do so much. It ultimately comes down to what the two sides see as their main leverage and like I said Tehran is sensing desperation which is why it's really moving forward with maximalist demands. Staying on Tehran as well, they are threatening to retaliate. So two questions here. What could that potentially look like given what we've already seen and would that most likely come if we see that maybe again these talks don't yield any progress? On your ladder we absolutely might. The threat of re-escalation is very real right now but as to what it could look like we've already seen glimpses. So of course Tehran is really good at toeing the line, not really escalating at least publicly and by that I mean for example when it comes to the Strait of Hormuz, it was not a total blockade. They allowed certain ships to pass, they blocked some, again they left it in the gray area. They might do the same thing with the ceasefire as they have already which is using their proxies to wage attacks. They're using some militias in Iraq to target Bahrain allegedly or there might still be rogue elements within the IRGC. We don't know and that's how they operate. They operate with the uncertainty. They will probably leverage some of these terror networks to reinforce this escalation while also having plausible deniability saying we were not involved, it was XYZ proxy. That is one realistic avenue. The other scenario here is that should the talks fail, the United States might actually wanting to enter this from a position of strength. We've seen Trump do that before in the two prior negotiation rounds. As soon as the negotiations failed to materialize, it was Washington that sent a very strong message saying that our threats are real and we will back those up. But that said, I don't know when it comes to domestic politics how confident Trump feels to relaunch another campaign given that midterms are coming up and given that the oil prices are finally calming. So because of those reasons, it's more likely for Tehran to escalate. And the third scenario and the final point on that is there might be a situation where the United States effectively just does not demand a deal, just walks out of the scenario and just leaves the conditions for the EU and the Persian Gulf Arab states to somehow navigate. That is also another possibility which would mean that any hostility would have to therefore be initiated by Tehran. All right, Jonathan. And for our viewers just tuning in, I do just want to share this again. This is from the White House. President Trump reposting his truth social lengthy post. But basically he's saying here China is very happy that I am permanently opening the trade of Hormuz. I'm doing it for them. Also in the world, this situation will never happen again. They have agreed not to send weapons to Iran. And I know we touched on that at the beginning of the interview here, but I just wanted to share it again for our viewers just tuning in. Now, as we wrap up here, Jonathan, anything else you want to add about any of this, whether it's this latest post from the White House or just anything else we've spoken about in this interview? Just going back to the role of China here and to an extent Moscow, we have not gotten official reports and that's one public message in Washington can amplify a bit more. If there is enough information that would indicate that China and Russia are actually stepping in meaningfully, not just diplomatically on the U.N. front, but actually sending weapons, drones, different kinds of missiles to the Islamic Republic since the war was ongoing, that would really have to play into our calculations as to how we see their relationship. It's still a gray area as to whether Tehran, Beijing or Moscow are simple partners or their allies during times of crisis. It would also tell us how China views Iran. Do they see Iran as a long lasting player in the region? Is it a regime that Beijing and want to put their bets on and potentially violate sanctions and go against the United States or not? And that's going to be critical as how we're going to view our adversaries in the next 10, 20 years. So we have to wait and see. But a lot of developments, as you noted, Christy. Yes, a lot of developments. We so appreciate you joining us every morning here to break it down for us. So Jonathan Sayeed with the Foundation for Defense of Democracies. Appreciate you. Thank you.