US eyes Iranian assets to fund Gulf allies' reconstruction

The US will attempt to redirect Iranian assets to Gulf states to cover rebuilding and repair costs from Iranian strikes, a source familiar with the matter told Reuters Saturday.

Treasury Secretary Scott Bessent has directed a team to assess the damage inflicted on Kuwait and Bahrain, as Tehran launched fresh drone attacks on both countries.

What Iranian assets is the US considering redirecting?

The source did not specify what kind of Iranian assets the Treasury was examining, and the language used did not appear limited to frozen funds. The US would also consider using Iranian assets to cover any future destruction.

Iran's adviser to the supreme leader had earlier said a peace deal hinged on the release of $24 billion in frozen Iranian assets held by the United States.

How does this affect the ceasefire between the US and Iran?

The threat to redirect Iranian assets risks becoming a new irritant in an already fragile ceasefire between Washington and Tehran. The truce was tested again this weekend, with both nations exchanging strikes. US forces hit Iranian coastal radar sites in Goruk and Qeshm Island, both in the Strait of Hormuz, after shooting down Iranian drones that US Central Command said threatened maritime traffic.

Iran's Revolutionary Guards said they retaliated against US bases in Kuwait and Bahrain. Kuwait's army said it engaged seven ballistic missiles passing over residential areas, causing material damage but no casualties.

In Bahrain, sirens sounded and residents were urged to seek shelter, with both countries condemning the strikes. Iran claimed hits on US bases in both countries, but the US military said six missiles were intercepted and a seventh failed to reach its target.

Where do peace negotiations stand?

Peace negotiations appear to have stalled, though a minister from mediator Pakistan traveled to Tehran on Saturday carrying a letter for Iran's supreme leader, Ayatollah Mojtaba Khamenei, Iran's semi-official ISNA news agency reported.

The US and Iran have been engaged in largely indirect talks for an interim deal that would leave longer-term issues, including Iran's nuclear program, to future negotiations.

Tehran is demanding access to billions of dollars in oil revenue, sanctions waivers on crude exports, the lifting of a US blockade on its ports, and leverage over the Strait of Hormuz. Iran has effectively blocked the waterway, through which about a fifth of global oil traffic passed before the war began three months ago.

What is the political and economic toll of the US-Iran war?

President Donald Trump faces mounting domestic pressure over rising gas prices to end what has become an unpopular conflict.

He told NBC's "Meet the Press" that while most of Iran's drone and missile manufacturing facilities had been destroyed, Iran still retained roughly 21 to 22 percent of its missile arsenal. The conflict has driven up oil prices and stoked inflation globally.

OPEC+ is set to agree Sunday on a fourth consecutive increase in oil output targets, though the war is still preventing several member countries from pumping more.

Separately, Israel's military said it intercepted two projectiles that crossed into Israeli territory from Lebanon on Sunday, a day after Lebanon reported that two army officers and a soldier were killed in an Israeli strike on a military vehicle in the south.