Key insights
- Iran has rejected the idea of its assets being used by the US to pay damages to regional allies, calling it a 'wrongful act'. This escalates geopolitical tensions in the Middle East, potentially impacting oil supply routes and global energy prices. While the direct financial impact on US equities might be limited, increased regional instability could lead to risk-off sentiment, affecting investor confidence and potentially causing a short-term dip in the market.
By Eman Abouhassira
June 7 (Reuters) - Iran’s Deputy Foreign Minister Kazem Gharibabadi said on Sunday that regional governments were "not in a position to demand reparations", responding to what he said were reports that the U.S. could use Iranian assets to compensate regional allies for war-related damages.
Gharibabadi added in a post on X that Iran’s assets were "neither war spoils for Washington nor a payment fund for its allies".
Reuters reported on Saturday, citing a source familiar with the matter, that the United States would make Iranian assets available to Gulf allies to support rebuilding and repairs for future damage caused by Iran.
The United States would also consider using those assets to support repairs for past damages, the source said, adding that U.S. Treasury Secretary Scott Bessent had directed a team to assess the cost of damage already inflicted on Gulf allies by Iran.
During the war, Iran launched missile and drone attacks on several Gulf countries, saying it was targeting U.S. and Israeli interests in the region.
On Saturday, Iran said it had launched ballistic missiles at U.S. bases in Kuwait and Bahrain. The U.S. military said six missiles were intercepted and a seventh did not reach its target, while Kuwait reported material damage but no casualties and Bahrain urged residents to seek shelter.
The Middle East conflict could saddle the region with as much as $58 billion in repair costs for energy-linked infrastructure alone, according to a report by research firm Rystad Energy in April.
Gharibabadi said any seizure, transfer or allocation of Iranian assets without the consent of the Iranian government would constitute "a new internationally wrongful act", giving rise to U.S. responsibility at a time when Washington claims to be seeking negotiation and understanding with Tehran. Such a move would also prompt an "appropriate response" from Iran, he said, without elaborating.
Iran has been asking for a portion of its seized funds to be released by the U.S. under a framework that the two countries are negotiating to end the Iran war.
Gharibabadi said some regional governments had placed their territory and facilities "at the service of aggression against Iran" and were therefore not in a position to demand reparations. He said those governments must fully compensate Iran for damages inflicted on it.
Tehran’s demands to end the war include the release of billions of dollars in frozen assets, as well as the lifting of U.S. and international sanctions and recognition of its sway over the Strait of Hormuz.
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