Iranian source says US has agreed to unfreeze Iranian funds, Washington denies it

A senior Iranian source said on Saturday the U.S. had agreed to release Iranian frozen assets held in Qatar and other foreign banks, but a U.S. official swiftly denied the assertion.

The senior Iranian source welcomed the purported U.S. move as a sign of "seriousness" in reaching a deal with Washington in talks in Islamabad. The source said ‌it was one ⁠of Iran's ⁠demands "in messages conveyed to the U.S. side" and that Tehran had received a U.S. agreement to release the assets.

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The source, who declined to be named due to the sensitivity of the matter, told Reuters that unfreezing the assets was "directly linked to ensuring safe passage through the Strait of Hormuz", which is expected to be a key issue in the talks.

The senior source did not give a value for ​the assets that Washington had agreed to unfreeze. A second ⁠Iranian source ‌said the United States had agreed to release $6 billion of frozen Iranian funds held ​by Qatar.

Qatar's ​Foreign Ministry did not immediately respond to a request for comment.

FUNDS ORIGINALLY ⁠FROZEN EIGHT YEARS AGO

The $6 billion, originally frozen in 2018, had been due for release in 2023 as part of a U.S.-Iranian prisoner swap but the funds were again frozen by the administration of President Joe Biden following the October 7, 2023 attacks on Israel by Iran's ally, the Palestinian militant group Hamas.

U.S. officials said at the time that Iran would not be able to access the money for the foreseeable future, stressing that Washington retained the right to completely freeze the account.

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The funds stem from Iranian ‌oil sales to South Korea and had been blocked in South Korean banks after President Donald Trump reimposed sanctions on Iran in 2018 - during his first term ​in the White ​House - and scrapped a deal ⁠between world powers and Tehran over its nuclear programme.

Under the September 2023 U.S.–Iran prisoner swap mediated by Doha, the money was transferred to Qatari bank accounts. The prisoner swap involved the release of ​five U.S. citizens detained in Iran in exchange for the funds’ release and the release of five Iranians held in the United States.

U.S. officials said at that time that the money was restricted to humanitarian use only, to be disbursed to approved vendors for food, medicine, medical equipment and agricultural goods shipped into Iran under U.S. Treasury oversight.