By Gram Slattery, Parisa Hafezi and Antoni Slodkowski
UNITED NATIONS, Sept 22 (Reuters) - President Donald Trump said on Tuesday that Washington and Tehran were moving toward a settlement, while a senior Iranian official said Tehran could reopen the Strait of Hormuz within days if the US eased military pressure and lifted its blockade on Iranian ports.
Trump's remarks came just hours after he repeated a threat at the UN General Assembly to annihilate Iran if it failed to strike a deal.
Speaking after
a meeting with British Prime Minister Andy Burnham at the United Nations in New York, Trump said: "They want to talk to us. They have been talking to us, even today they've been talking to us, and the relationship is developing.
"But we can't let them - and they understand that - we can't let them have a nuclear weapon."
He gave no details on the talks. No face-to-face meetings between Iran and the United States are known to have taken place since July, when an agreement on an interim deal to end the war collapsed weeks after it was signed.
Earlier, in a combative speech to the UN, Trump gave no sign of readiness to compromise. He called for Iran's complete economic isolation and said he believed a deal would be done after November's midterm elections "because it doesn't make sense for them not to. They're waiting to see how I do in the midterm election."
Trump faces growing domestic discontent over the unpopular Iran war, rising energy costs and stubbornly elevated inflation.
Iran had earlier signalled a willingness to revive negotiations to end their almost seven-month-old conflict, with the presidents of both countries due at the UN for the annual gathering.
The senior Iranian official told Reuters that Tehran had conveyed its latest proposal to Washington through mediators last week and could reopen the Strait of Hormuz to Gulf shipping within seven days if its demands were met.
IRAN SEES 'GOLDEN OPPORTUNITY' TO REVIVE DIPLOMACY
The official had earlier told Reuters that the US should "announce that it wants to resolve the issue diplomatically, make that official, and then agree on a timeline".
"The UN General Assembly is a golden opportunity for the US to return to diplomacy," the official said.
In a reminder of Iran's firm position so far, Parliament Speaker Mohammad Baqer Qalibaf, who headed Iran's negotiating team at previous talks, said Iran would never surrender: "Trump must understand that he cannot impose his power on the Iranian people and its armed forces."
Trump was due to meet on Tuesday with leaders of the six Gulf Arab states: Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates.
All are keen to restore shipping through Hormuz, the conduit for a fifth of global oil and gas shipments before the war, but wary of giving their longstanding rival Iran too much power.
All apart from Oman also host huge US military bases that have come under repeated Iranian attack throughout the war.
Saudi Arabia, the largest of the Gulf states, has been drawn deeper into the war this month as Iran-aligned Houthi fighters have advanced in Yemen, routing forces of the Saudi-backed government and threatening Saudi oil exports through the Red Sea.
Oil markets found some relief on Tuesday after sources told Reuters that Saudi Arabia had restarted operations at its East-West Pipeline and could resume exports from the Red Sea port of Yanbu within hours, albeit at reduced volumes. [O/R]
The pipeline, Saudi Arabia's main export route bypassing wartime disruption in the Strait of Hormuz, had been shut after attacks this month that Riyadh blamed on Iranian-backed groups in Iraq.
SAUDIS SEEK US SUPPORT AGAINST HOUTHIS
The Houthis have driven back Saudi-supported government forces along the Red Sea and the Bab el-Mandeb Strait at its mouth, and have attacked Saudi Arabia directly with missiles and drones. They are now pushing to seize the strategic heights of the Kahboub Mountains that overlook the Red Sea coast.
The US, which bombed the Houthis for two months last year, has so far rebuffed repeated pleas from Saudi Arabia's Crown Prince Mohammed bin Salman to rejoin the fight. The New York Times reported that Trump called off US strikes against the Houthis on Sunday at the last minute.
Asked why Washington had held back from striking the Houthis, US Secretary of State Marco Rubio said: "Ultimately, if it comes down to it, the United States will always stand with Saudi Arabia and support them because we have an agreement with them to do so.
"That said, that is a very dangerous and complex conflict that pre-exists ... We have a history with the Houthis as well, and that's something we don't want to see impacted either."
On the table at the Gulf states' meeting with Trump is a Qatari proposal for a framework to bring Iran and the Arab Gulf states into a common security architecture, regional sources said. One source said Iran was reviewing the proposal.
Speaking at the Qatar Economic Forum in New York on Sunday, Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani said any such arrangement would need to provide security guarantees for the Gulf states and expand economic interdependence with Iran.
(Reporting by Reuters Gulf bureaux;Writing by Peter Graff and Kevin Liffey; Editing by Gareth Jones, Alexandra Hudson, Ros Russell)
