U.S. tries to talk Iran out of tolls as talks resume in Doha

• After several exchanges of fire, the U.S. and Iran did reach an understanding Sunday on de-escalating the situation in the strait for a week. That means new clashes could erupt right after the 4th of July celebrations.
• "We have reached an understanding that we will keep things quiet for the coming week, so progress on all aspects of the MOU can be worked on in a productive environment, without missiles flying," a U.S. official told Axios.
• "The President has been clear that every time they shoot, we will shoot more — and at targets that further degrade their position in the Strait," the U.S. official added.

The latest: Vice President Vance said Wednesday that the U.S. technical team "is sitting down with the Iranians, with the Qataris, and with others in Doha... ensuring that we continue to make the progress," adding: "It's still pretty early, but talks are going well."

• Iranian Deputy Foreign Minister Kazem Gharibabadi, who is heading the Iranian technical team, denied after the conclusion of Wednesday's meetings that there'd been any direct talks, and said all negotiations took place via the Qatari and Pakistani mediators.

• He said the parties decided to establish "an emergency communication channel by tomorrow" in order to address violations of the MOU. He added that the expenditure of Iran's frozen funds in Qatar was discussed and "it was agreed that, based on Iran's stated needs, the required goods would be purchased and delivered to Iran."

Driving the news: President Trump's envoys Steve Witkoff and Jared Kushner met in Doha on Tuesday with the prime minister of Qatar and other Qatari officials who are mediating between the U.S. and Iran. On Wednesday, they met with the Qatari emir.

• The envoys hoped to reach understandings that would allow negotiations between the U.S. and Iranian technical teams to begin.
• Two regional sources said the meetings went well and paved the way for the technical talks. It's unclear if Witkoff and Kushner had any direct engagement with Iranian officials.
• The main issues discussed in Doha were the situation in the strait, Iran's frozen assets, and the ceasefire in Lebanon, the sources said.

Between the lines: The main impetus for Iran's attacks against several commercial ships last week was the establishment of a new shipping route in the Strait of Hormuz close to the Omani coast, which infuriated the Iranians.

• The Iranians are publicly insisting they have joint sovereignty over the strait, along with Oman, and that both countries will administer it and request passage fees after the 60-day term of the MOU ends.
• The U.S. interpretation of the MOU is that any new arrangements in the strait, which is an international waterway, must also be endorsed by the Gulf countries. The Iranian interpretation is that the strait is in their territorial waters, so the Gulf countries can express their opinions but the final decision is in their hands.
• The dispute was a key issue in the talks Secretary of State Marco Rubio had with his counterparts from six Gulf countries in Bahrain last week.
• "The Gulf is currently in discussions about how the Strait should be managed after [the MOU expires] and those discussions are converging" with the U.S.-Iran negotiations, a U.S. official said.

Behind the scenes: Witkoff and Kushner have been trying to convey to the Iranians that their demand for tolls could blow up a U.S.-Iran deal that would ultimately be far more lucrative for Iran.

• "The U.S. message to Iran was 'Think bigger,'" a U.S. official said.
• The official claimed the sums Iran could generate from developing and selling oil and other resources freely — if the U.S. lifted all sanctions under a deal — "would be 100 times more valuable to them than using a gangster tactic to try and charge a toll."
• "We are pushing them to think bigger about their potential in the context of a broader nuclear and regional non-intervention deal," the U.S. official said.

What he's saying: On Wednesday, Trump said the U.S. has had "very good meetings" with Iran and claimed "it is all going well."

• When asked, Trump also pushed back on the idea that he might resume the war soon. But a source who spoke to the president in recent days said he'd been very frustrated by the Iranian attacks in the strait last week.
• The source and another U.S. official confirmed Trump even asked to be briefed on military options, but eventually was convinced to let the negotiations play out.
• The Wall Street Journal first reported on the military briefing Trump received.

The intrigue: Al-Arabiya reported Wednesday that during the talks in Doha, the U.S. and Iran reached an understanding about releasing the first tranche of frozen Iranian funds held in Qatar.

• A regional source confirmed that and said the $3 billion would not be transferred to Iran in cash, but the Iranian central bank would be able to use it for buying humanitarian goods, at least some of which are to come from the U.S. market.
• However, U.S. officials denied such an understanding had been reached and said no funds had been released.

What to watch: During the talks in Doha, U.S. negotiators conveyed to the Iranians their intention to continue to restrain Israel and make sure it abides by the ceasefire in Lebanon, according to a regional source.

• The source said the U.S. stressed that the Israeli withdrawal from two pilot zones in southern Lebanon is a first step and, if properly implemented, could lead to further withdrawals.
• "POTUS has committed the U.S. to muzzling its pets in Tel Aviv. If they ignore their master, Iran will school them," Iranian Foreign Minister Abbas Araghchi posted on X on Wednesday.