Washington is preparing to redirect Iranian assets toward compensating Gulf states for war damage — a financial maneuver that would strip from the negotiating table the single concession Tehran has identified as the minimum price of any peace deal, even as both sides continued trading strikes across the Strait of Hormuz over the weekend and a Pakistani diplomatic mission landed in Tehran carrying a letter for Iran’s supreme leader.
The collision between those two tracks — asset seizure and active mediation — captures the structural contradiction now defining the three-month-old conflict.
Treasury Secretary Scott Bessent has directed a team to assess the costs of damage Iran has inflicted on Gulf allies, a source familiar with the matter told ATN Saturday, with the U.S. prepared to consider Iranian assets as a funding mechanism for both current and future destruction. The source did not specify which category of assets the Treasury was examining, and the language used suggested the assessment was not limited to frozen funds.
That distinction matters: Iran’s chief negotiating demand has been the release of $24 billion in assets the United States has frozen — a figure Mohsen Rezaei, an adviser to Supreme Leader Ayatollah Mojtaba Khamenei, identified to CNN on Friday as the prerequisite for any agreement. If Washington moves to redirect those same assets to Kuwait and Bahrain as war reparations, the financial architecture Iran is negotiating toward ceases to exist.
There was no pause in the fighting while these calculations were being made.
U.S. forces struck Iranian coastal radar installations at Goruk and on Qeshm Island — both positioned along the Strait of Hormuz — early Saturday after American Central Command shot down Iranian drones it said posed a direct threat to maritime traffic. Two additional Iranian attack drones targeting shipping in the strait were intercepted later in the day. Iran’s Revolutionary Guards responded by launching ballistic missiles at U.S. military bases in Kuwait and Bahrain. Kuwait’s army said it engaged seven inbound ballistic missiles that passed over residential areas, producing material damage but no casualties. In Bahrain, air raid sirens activated and residents were directed to seek shelter. Both governments condemned the strikes.
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Iran subsequently claimed direct hits on U.S. installations in both countries. The U.S. military said six missiles were intercepted and a seventh failed to reach its target.
Kuwait and Bahrain sit at the geographic center of Washington’s Gulf security architecture. U.S. Central Command’s forward headquarters is in Qatar, but Kuwait hosts tens of thousands of American troops and Bahrain serves as the home of the U.S. Fifth Fleet — the naval force responsible for the Persian Gulf, the Red Sea, and the waters around the Strait of Hormuz. Iranian strikes on those facilities, however partially intercepted, represent an escalatory threshold that the conflict has now crossed repeatedly.
The Strait itself remains the war’s most consequential chokepoint.
Before the conflict began, approximately one-fifth of global oil and liquefied natural gas supplies transited the waterway daily. Iran has effectively blocked it for three months, a closure that has driven energy prices higher across every major economy and fed the inflation now generating domestic political pressure on Trump in advance of November’s congressional elections. OPEC+ is expected to agree Sunday on a fourth consecutive monthly increase in output targets — a move designed to compensate for the supply disruption — though the war continues to prevent several of the group’s own members from physically increasing production regardless of what targets are set on paper.
Trump, in excerpts from a “Meet the Press” interview released Friday, offered a candid accounting of the military campaign’s limits. Most of Iran’s drone and missile manufacturing infrastructure had been destroyed, he said — but Iran retained access to roughly 21 to 22 percent of its pre-war missile inventory. “It’s a lot of missiles, but it’s not what it was when we first attacked,” he told NBC. That concession, from a president who entered the conflict promising rapid military resolution, is a different kind of statement than the victory declarations that accompanied the war’s early weeks.
Iran’s terms for ending the conflict have remained consistent throughout: unfrozen oil revenue, sanctions waivers on crude exports, an end to the U.S. naval blockade on its ports, and retention of influence over the Strait. Washington’s stated priority has been eliminating Iran’s nuclear weapons capability — a goal the U.N. atomic watchdog assessed this week as unachieved, finding Iran’s nuclear program largely unchanged despite three months of sustained strikes.
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The Pakistani diplomatic mission to Tehran represents the most visible active mediation effort currently in motion. A minister traveled to the Iranian capital Saturday carrying a letter addressed to Khamenei, Iran’s semi-official ISNA news agency reported. Pakistan has positioned itself as a potential intermediary given its relationships with both Washington and Tehran — but the gap between the sides, measured against the week’s events, remains wide enough that no official on either side has described negotiations as making progress.
On Lebanon’s southern front, Israel’s military said it intercepted two projectiles that crossed into Israeli territory Sunday — a day after Lebanon reported that an Israeli strike on a military vehicle killed two army officers and a soldier in the south of the country.
The asset seizure plan, the stalled talks, the continued strikes, and a Pakistani envoy carrying an unspecified letter to a supreme leader who has not appeared in public since his father was killed in an airstrike at the war’s outset: this is the diplomatic landscape of a conflict that both sides periodically describe as negotiable and neither has yet chosen to end.