By Parisa Hafezi and Katharine Jackson
DUBAI/WASHINGTON, Aug 18 (Reuters) - U.S. President Donald Trump said on Tuesday no talks were taking place with Iran and none were scheduled, and he insisted that the Strait of Hormuz was open, contradicting an earlier Iranian assertion that the critical waterway remained shut to shipping.
The receding prospects of a deal to end the nearly six-month conflict drove up oil prices again on Tuesday, while stock markets sagged and borrowing costs for major economies
including the U.S. hit multi-decade highs, amid concerns about the long-term inflationary and fiscal impact of the crisis.
A temporary ceasefire agreement expired on Monday and a senior Iranian official told Reuters that his country was moving to a "fully offensive" military posture due to the diplomatic stalemate, though there were no reports of fresh strikes by either side on Tuesday.
"There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran," Trump said in a post on Truth Social on Tuesday.
"The Naval Blockade remains in full force and effect. The Hormuz Strait is open and operating. All water mines have been removed or detonated," he added.
On Monday, Jared Kushner, Trump's son-in-law and special envoy, had sounded an optimistic note, saying talks with Iran were still under way and were "probably more robust" than they had ever been.
SHIPPING DISRUPTED
Despite Trump's typically ebullient remarks about the situation in the Gulf, preliminary shipping data on Tuesday showed ship crossings via the Strait of Hormuz were still in single digits on Monday.
The United Kingdom Maritime Trade Operations said it received a report on Tuesday that a vessel was struck by an unknown projectile while transiting outbound in the Strait of Hormuz, causing engine room damage and a crew casualty.
The remaining crew were being assisted by the Omani Coast Guard, according to the report.
Top Iranian negotiator Mohammad Baqer Qalibaf said in comments published by state media that the strait would remain shut until the U.S. met the conditions of an interim deal signed with Iran in June.
These conditions include the U.S. lifting its blockade of Iranian ports, lifting oil sanctions, releasing Tehran's frozen assets, and ending threats and military operations on all fronts, Qalibaf told parliament.
A memorandum of understanding signed on June 17 had set a 60-day time frame for a broader deal on Iran's nuclear programme and U.S. sanctions. That period elapsed on Monday and Trump said he had no plans to extend it.
The agreement, which declared the "immediate and permanent termination of military operations on all fronts," had quickly unravelled over a dispute about control of the Strait of Hormuz, the narrow waterway through which a fifth of global oil and liquefied natural gas flowed before the war.
IRAN SAYS IT STILL OPEN TO TALKS
Both Trump and Tehran have frequently switched between threats and more emollient rhetoric as they seek a way out of the crisis, which erupted when the U.S. and Israel launched strikes against Iran on February 28.
Iran remains open to dialogue with the U.S. but does not confuse negotiations with surrender, Mohammad Mokhber, an adviser to Iran's supreme leader, said on Tuesday, according to the semi-official Fars news agency.
Mokhber said military pressure and sanctions would not break Iran's resolve and that the country would defend its security, dignity and allies while not seeking war.
Even as Iran projects resilience in the war, its leaders are worried that a threat of more economic punishment could increase hardships, reignite unrest and further erode the Islamic Republic’s legitimacy, according to three Iranian officials.
Thousands of people have been killed in the conflict, mainly in Iran and Lebanon. Iran has bombed U.S. military bases and infrastructure in countries including Oman, Jordan, Kuwait, Israel, the United Arab Emirates and Saudi Arabia.
Benchmark Brent crude oil futures have surged during the conflict, hitting a peak of $126 a barrel, roughly 75% above pre-war levels. Brent crude futures settled up 20 cents on Tuesday at just over $91 a barrel.
For Americans who will vote in November congressional elections, gasoline prices have risen above $4 per gallon, up from less than $3 before the war, according to the automotive group AAA.
(Additional reporting by Dubai bureau and Daphne Psaledakis in Washington; Writing by Gareth Jones; Editing by Alison Williams)
