Iran-US deal still out of reach despite diplomatic push, Iranian official says

By Parisa Hafezi and Jana Choukeir

DUBAI, Nov 3 (Reuters) - Iran and the United States are still far from a deal to end their war, a senior Iranian official told Reuters on Tuesday, while mediator Qatar stepped up efforts to bridge differences and avert a renewed escalation after the US midterm elections.

Overnight, the US carried out "defensive" strikes on Iran's Qeshm island, with a US official saying the strikes targeted surface-to-air missiles used against US assets. Another official said the strikes appeared limited and did not signal a return to major combat operations.

Qatar has intensified mediation efforts amid fears the conflict launched by the United States and Israel in February could flare up again after Tuesday's midterms.

"Mediators are working hard to narrow gaps between Tehran and Washington," the senior Iranian official said, after Qatari mediators travelled to Tehran on Monday night for talks on a version of a draft US-Iran deal under discussion for the past eight days.

"Tehran's conditions must be met if the US wants Hormuz reopened," the Iranian official cautioned, referring to the waterway critical for global energy supplies.

Qatar's foreign ministry spokesperson Majed al-Ansari said that both the United States and Iran were reviewing proposals put forward by mediators. While the Qatari team that travelled to Tehran had returned to Doha, talks were continuing.

"There are intensive joint regional efforts underway to avoid escalation," he told a news briefing, adding that Qatar remained hopeful a deal could still be reached to pave the way for future negotiations.

"If there were no glimmer of hope, there would be no negotiations.. and as a mediator, we cannot lose hope," he said.

An official briefed on the talks said they expected feedback from Washington and Tehran within the next 36 hours.

"The mediators came up with a new suggestion to move the process along, and it's currently being studied by the two sides," the official said.

'FORCEFUL RESPONSE'

The senior Iranian official, who spoke on condition of anonymity, said Tehran would not accept Washington's "excessive demands" and that nuclear talks could begin only after Iran's conditions were met.

Tehran would respond forcefully, in the region and beyond, to US strikes, the official added.

Oil prices rose by about 1.3% on Tuesday, having dropped more than 7% the previous day on hopes diplomacy was progressing.

Iran's Revolutionary Guards said they downed a US MQ-9 drone and two Lucas drones in the skies near the Strait of Hormuz.

Parliament Speaker Mohammad Baqer Qalibaf said the ball was in Washington's court after Tehran had delivered what he described as a "strong and rational response".

"The enemy seeks to force the Iranian nation into submission through threats and military action, but they are sorely mistaken; Iran will not submit," Qalibaf said. He added that Tehran's response to any US miscalculation would be unpredictable and unconstrained by geography.

The warnings come as countries across the region braced for the possibility that US President Donald Trump could resume attacks after the midterms.

But Trump cast doubt on Monday about whether he would follow through on threats to resume military strikes after the vote, saying he believed Tehran wanted a deal as soon as possible and that such an agreement "could happen."

Asked by reporters if he was considering striking Iran after the midterms, Trump replied, "No."

The head of Iran's armed forces general staff, Ali Abdollahi, said Iran's military was updating target lists that included US and Israeli assets and would respond immediately to any threat.

Since Supreme Leader Ayatollah Mojtaba Khamenei ordered the armed forces last week to respond immediately and without "geographic limits" to any enemy threat, Iranian officials and media outlets have increasingly raised the prospect of striking bases beyond the region that are used to launch attacks on Iran.

Hardline newspaper Kayhan said on Tuesday that US facilities in Britain, Italy, Greece, Romania, Albania and Cyprus could be targeted in the event of renewed war.

IRANIAN-SAUDI TALKS

Alongside indirect exchanges between Tehran and Washington, regional powers are pursuing diplomatic efforts to prevent further escalation. The war has spread, with attacks by Yemen's Iran-aligned Houthis on Saudi Arabia.

Foreign Minister Abbas Araqchi said on Tuesday that talks with Saudi Arabia were continuing to seek new regional security arrangements that would exclude foreign military involvement.

Last week, senior officials from Saudi Arabia, Turkey and Pakistan met Iranian counterparts in Tehran, the first such high-level contacts since August.

Houthi attacks on Saudi Arabia have escalated as the powerful militia advanced towards the Bab el-Mandeb Strait, a key shipping chokepoint that lies on the opposite side of the Arabian Peninsula from the Strait of Hormuz.

The Houthis have also attacked Saudi oil facilities and airports including Riyadh's international airport, disrupting flights and oil exports and prompting Saudi air strikes in Yemen.

(Additional reporting by Nayera Abdallah, Tala Ramadan, Andrew Mills; Writing by Dubai Newsroom and Tom Perry, Editing by Raju Gopalakrishnan and Ros Russell)