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Cairo: Mediators have achieved progress in getting the United States and Iran back to negotiations, regional officials said Monday, July 27, after both sides paused attacks following a period of rapidly escalating tensions. But scattered attacks by armed groups across the region underscored the lingering tensions.

Saudi Arabia said it had shot down drones fired by Iran-backed militias in Iraq that had targeted its petroleum facilities. Iran-backed Houthi rebels in Yemen meanwhile claimed to have attacked Saudi oil facilities as part of a separate but related conflict. It was unclear if they referred to the same attack.

Two drone attacks were reported against a Kurdish Iranian dissident group in Iraq, and Jordan said it had shot down two drones, without saying where they originated. There were no reports of casualties or damage.

Iran and Ukraine, meanwhile, have been publicly feuding since Ukraine fired on at least one Iranian vessel in the Caspian Sea over the weekend. Iran, which said a sailor had been killed in the attack, is an important ally of Russia in its war against Ukraine, helping Moscow build up its drone expertise.

Neither the US nor Iran reported carrying out any attacks for three days — a respite after about two weeks of sustained bombardments that had led to increasing fears of a return to all-out war.

The two regional officials, who spoke on condition of anonymity to discuss the closed-door talks, said mediators led by Qatar and Pakistan were working to bridge the gap between Washington and Tehran to return to an interim ceasefire deal that had collapsed after the exchanges of fire.

No strikes over the weekend

The US has paused attacks after targeting Iranian coastal areas and infrastructure in a nearly two-week escalation sparked by Iran’s firing at ships trying to transit the Strait of Hormuz, a crucial waterway for global oil shipments.

US President Donald Trump is “giving talks some space. He’s giving it a little bit of room,” Mike Waltz, the US ambassador to the United Nations, told Fox News.

Waltz dismissed the idea that the US stockpile of interceptors crucial in defending against Iranian attacks is running low, but experts have questioned how long both the US and Iran can afford to keep up attacks.

Iran halted its attacks following the American pause, Tehran’s army spokesperson told Iranian state TV on Sunday. Tehran in recent days has counterattacked against countries in the region hosting US military forces, killing at least three service members at a base in Jordan and one in Iraq.

Regional officials cite progress in talks

One of the regional officials who spoke to AP on Monday described the progress made in mediation efforts as “significant.” He said mediators were working with Iran and Oman on a mechanism for managing vessels’ transit through the Strait of Hormuz, the flashpoint for the latest strikes and counterstrikes.

Iran’s Foreign Ministry spokesperson, Esmail Baghaei, said during a news conference in Tehran on Monday that “mediators may convey messages to us from the American side” but that there were no direct negotiations.

He said Iran and Oman, which lies on the other side of the Strait of Hormuz, had already held talks on Friday and Saturday on how to manage ship traffic through the waterway.

“The objective is for Iran and Oman, as the two coastal states, to develop mechanisms to ensure safe navigation through the Strait of Hormuz while respecting the sovereign rights and sovereignty of both coastal states, as well as Iran’s security and national interests” Baghaei said. He stressed that the waterway remains closed.

Tehran has asserted that the interim deal with the US allows it to manage shipping on the waterway and potentially charge fees, and it has objected to US efforts to support an alternative route that passes close to Oman. The strait was open to all without fees before the war.

The US military on Monday said its recently reimposed naval blockade against Iran continued, with 17 commercial ships redirected, two disabled and two boarded.

The 60-day period established by the interim deal in mid-June is now well into its second half, and major issues that were meant to be negotiated — notably Iran’s nuclear program at the heart of tensions — have been set aside as mediators try to keep both sides talking.

Shipping traffic on the strait is at a 3-week low

Concerns have grown about shipping through another crucial waterway in the region, the Bab al-Mandeb strait to the Red Sea. The Houthis last week threatened a blockade of Saudi shipping there, and fired on at least one Saudi tanker, setting it alight.

Global energy supplies and the economy remain in the balance as gasoline prices have risen again.

Commercial shipping traffic in the Strait of Hormuz was at a three-week low, a maritime body overseen by the US Navy said Sunday, adding that no new attacks had been confirmed in the past 72 hours. It said traffic remained steady through Bab el-Mandeb.

Netanyahu says he fully’ backs Trump’s efforts

Meanwhile, Israeli Prime Minister Benjamin Netanyahu said he plans to meet with Trump in Washington on Tuesday. They last met in Washington in February, weeks before they launched the war on Iran that killed senior leaders, including Supreme Leader Ayatollah Ali Khamenei.

The Iranian-backed Hezbollah militant group in Lebanon fired at Israel two days after the war began, and Israel responded with airstrikes and a ground invasion. Since then, the US has supported landmark direct talks between Lebanon and Israel to try to calm that front and find a way to disarm Hezbollah.

Iran funds will cover ship damage: Trump

US President Donald Trump has said Iranian funds controlled by Washington will be used to compensate for damage caused to ships in the Strait of Hormuz during the conflict.

Trump made the announcement while speaking to reporters aboard Air Force One on Monday. He rejected the suggestion that the United States would use its own funds to reimburse shipping companies.

“No. No. We’re going to use Iran’s money to pay for the damage they did,” Trump said when asked whether the US would pay the companies directly.

“In other words, Iran money that we control will be used to pay for damages. Sound good? Not bad, right? You should be rewarded,” he added.

Trump did not explain how much Iranian money was under US control, which shipping companies would qualify or how compensation would be distributed.

The president said conditions in the Strait of Hormuz had improved after US military operations against Iran. He also said Washington and Tehran were engaged in talks.

“Their whole shoreline is wiped out. The strait is in very good shape now, and we’re talking right now,” Trump said.

He said Iran had sought a pause in attacks as negotiations continued and suggested that the United States could resume military action if no agreement was reached.

“I think there’s a good chance that something could happen. And if it does, good. If it doesn’t, we go back to doing what we were doing two days ago,” Trump said.

The president claimed Iran had requested a meeting through intermediaries and through direct communication after coming under heavy US military pressure.

“They want to meet and we’re meeting. We’ll see what happens. There’s a chance we could make a deal,” Trump said. “Without what we did, they wouldn’t even be talking to us.”

Trump also compared his approach towards Iran with US actions involving Venezuela. He said money received from Venezuela had covered Washington’s costs and predicted a similar outcome with Iran.

“We paid for that war many times over, and that will happen with Iran also,” Trump said.

Asked where money received from Venezuela was going, Trump said it was being used for “running the country” and could be directed towards the military with congressional approval.

The Strait of Hormuz links the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is a critical route for oil and liquefied natural gas exports from Gulf producers to global markets, including energy-importing countries such as India.

(With inputs from agencies)