By Parisa Hafezi and John Irish
DUBAI, June 11 (Reuters) - Efforts to reach an interim deal to end hostilities between Iran and the United States have intensified, Iranian and western sources told Reuters on Thursday, despite strikes launched by both sides, with the warring parties discussing how to release frozen Iranian funds.
The sources said Iran and the U.S. were still exchanging messages over details of a memorandum of understanding amid the ongoing confrontation between Tehran and Washington.
Three Iranian sources said a political understanding had been reached, but some issues remained to be discussed in detail, including a mechanism for the release of tens of billions of dollars of Iranian oil revenues frozen in foreign banks.
"Iran wants $6 billion to $12 billion of its frozen funds to be released to Tehran, while Washington wants to release funds in stages for humanitarian goods and rejects returning funds to Iran outright," said one of the Iranian sources.
Another Iranian official said discussions continued over the amount of frozen assets to be released immediately and a guaranteed timetable for the payment of the remaining $12 billion of Iran's funds within a 60-day period.
A senior European official said: "Right now, talks are focusing very precisely on the technical details and the financial amount — in short, the level of liquidity available to Iran."
A U.S. source familiar with the matter also confirmed that messages were still being exchanged, and that a political understanding had been reached but that the mechanism around frozen funds was still being ironed out.
The White House and Iran's Foreign Ministry did not immediately respond to a Reuters request for comment on this story.
The framework of an interim deal would centre on a temporary easing of Iran's grip on the Strait of Hormuz and phased access through the waterway, while ending a U.S. blockade on Iranian ports. Unresolved questions over Tehran's nuclear enrichment capacity and its stockpile of highly enriched uranium would be left for future talks.
THE WAR HAS REACHED A DEAD END, SAYS IRANIAN SOURCE
For its own survival, the clerical establishment's priority is not a comprehensive settlement but a framework that can restore minimum breathing space for the country by unlocking its frozen assets and ending the war, the Iranian sources said.
The U.S. and Iran traded air attacks on Thursday for a second straight day, and President Donald Trump threatened more strikes if Tehran does not immediately agree to a peace deal.
But one of the Iranian sources said the military action between the two sides had reached an impasse with neither side able to break the stalemate.
"This war, from a military standpoint, is a dead end. The Americans could not achieve their goals by attacking Iran. There has been progress in negotiations," he said.
"The recent military confrontations could be preparations for announcing an agreement. Of course, anything is possible, even a return to full-scale war."
TRUMP WANTS BETTER DEAL THAN IN 2015, ANALYSTS SAY
Trump has repeatedly said a deal is close, while also threatening to intensify bombing.
Analysts have said he was concerned how any agreement with Iran compared to the nuclear deal reached in 2015 between Tehran and world powers, when President Barack Obama was in office. Trump criticised that deal, including financial terms offered to Iran. He pulled the U.S. out in 2018 when he was in office.
Trump posted on his Truth Social account on May 24 that any deal he secured with Iran "will be a good and proper one, not like the one made by Obama, which gave Iran massive amounts of CASH, and a clear and open path to a Nuclear Weapon."
The U.S. blockade on Iran's ports and Tehran's grip on the Strait of Hormuz have sustained mutual pressure, driving up economic costs while leaving the risk of renewed fighting unresolved.
Another Iranian source said Tehran wanted to get the U.S. naval blockade lifted, citing economic strains.
Iran, for various reasons — especially economic pressures and a population exhausted by war and uncertainty — seeks an end to a "no war, no peace" situation, the sources said.
"We must get out of this state of neither war nor peace. War is certainly not in Iran's interest," Iran's President Masoud Pezeshkian said on Wednesday. "But that does not mean that if the U.S. commits aggression against our ... territory, we will surrender or back down. They can dream on."
(Additional reporting by Humeyra Pamuk in Washington, Writing by Parisa Hafezi; Editing by Alison Williams and Toby Chopra)
