By Steve Holland and Jana Choukeir
EVIAN-LES-BAINS, France/DUBAI, June 17 (Reuters) - Leaders of the G7 countries demanded a ceasefire in Lebanon on Wednesday and said they will diversify energy supply routes to reduce dependence on the Strait of Hormuz in response to the war in Iran, as they welcomed an interim deal to end the conflict.
The leaders met for a summit in the French town of Evian-les-Bains on Lake Geneva, while details of the U.S.-Iran ceasefire agreement trickled out of Washington and
Tehran ahead of its formal unveiling, expected on Friday across the nearby Swiss border.
The U.S.-Iran agreement is expected to launch negotiations towards a final settlement to end the war, which has killed more than 7,000 people, mostly in Iran and Lebanon.
"We underline the need for the negotiation ... to address the threats posed by Iran in the region and beyond and ensure that they never obtain a nuclear weapon," the leaders said in a statement.
The summit gave U.S. President Donald Trump a chance to present his deal with Iran to major allies Britain, Canada, France, Germany, Italy and Japan.
They mostly share Washington's concerns about Iran's nuclear programme and other issues, but never endorsed his decision to go to war and worry that Tehran gained leverage by withstanding the superpower onslaught and asserting control over the strait.
The leaders said they were ready to contribute to the implementation of the accord, with a coalition led by Britain and France set to help secure shipping once the Strait of Hormuz reopens as expected on Friday.
The memorandum of understanding signed by Washington and Tehran this week, though yet to be made public, extends a ceasefire announced in April by another 60 days to allow the warring countries to negotiate a permanent truce.
The U.S. president appears to have achieved little of what he said he wanted at the outset of the war. Iran's theocratic government remains in place, its stockpile of highly enriched uranium has not been surrendered, its ballistic missile capabilities have not been destroyed and it has not ended its support for anti-Israel militias like Hezbollah in Lebanon.
Trump said the agreement states that Iran will not have a nuclear weapon - a restatement of Iran's official position since the 1970s - and U.S. officials say further discussions will lead to the removal or destruction of its enriched uranium stockpile.
But ending the war on such terms could still expose Trump to criticism, including from hawks within his own Republican party, ahead of midterm elections in November.
TRUCE IN LEBANON?
One of the biggest questions still hanging over the truce is the fate of Lebanon, which Israel invaded in March to root out Hezbollah after the militant group fired across the border in solidarity with Tehran following U.S.-Israeli strikes on Iran.
Israeli forces still occupy a swathe of southern Lebanon, where more than a million people have been driven from their homes, while Hezbollah remains undefeated.
Iran says the ceasefire must also end hostilities in Lebanon, and that a permanent deal must lead to an Israeli withdrawal. Israel, which was excluded from the U.S.-Iran peace negotiations, says it will not withdraw and reserves the right to use military force.
That has opened up a rift between Israel and the United States, with Trump publicly berating his wartime ally Israeli Prime Minister Benjamin Netanyahu. On Tuesday Trump said at the summit that he was "not happy" with the way Israel had handled itself.
"Without us, without the United States, there would be no Israel. Without me, there would be no Israel, because no other president was willing to do what I did," Trump said.
In their statement, the G7 leaders called for an "immediate robust ceasefire" in Lebanon and the disarmament of Hezbollah.
A Hezbollah spokesperson told Reuters the group believed Iran would not agree to a permanent truce if the Israeli occupation did not end.
After decades of U.S. and international financial sanctions that pushed Iran's economy to the brink, a peace deal could deliver economic benefits. The memorandum includes a $300 billion reconstruction fund, paid for by neighbouring Gulf states, if Iran complies with other terms.
In the coming 60 days, negotiators will return to difficult issues such as the future of Iran's nuclear programme. But Iran's support for regional militia groups and its missile arsenal do not appear to be on the agenda, in what would amount to major U.S. concessions.
Oil prices fell again on Wednesday on prospects for the reopening of the Strait of Hormuz, with Brent crude futures below $80, at their lowest level since the opening salvos of the U.S.-Iran conflict.
A senior U.S. official said the U.S. will waive sanctions on Iranian oil under the deal to end the war, raising the prospect of millions of additional barrels of supply, though industry officials say Middle East oil and gas output will take months to fully recover.
The G7 leaders said they had committed to "accelerate the diversification of energy supply routes in order to reduce global vulnerability to the Strait of Hormuz and to increase our energy stocks."
(Reporting by Reuters bureaus; Writing by Stephen Coates; Editing by Peter Graff)
