Iran Denies Drone Loss, Gibraltar to Detain Grace 1 longer

Iran on Friday denied President Donald Trump's assertion that the U.S. Navy has destroyed one of its drones, saying all of its unmanned planes were accounted for, amid growing international concern that both sides could blunder into a war in the Gulf.

In the latest episode to test nerves around the strategic waterway, Trump said on Thursday the drone had flown to within 1,000 yards (914 metres) of the U.S. warship Boxer in a "provocative and hostile action" and had ignored several calls to stand down.

Iran dismissed the report.

"All drones belonging to Iran in the Persian Gulf and the Strait of Hormuz ... returned safely to their bases after their mission of identification and control," Abolfazl Shekarchi, a senior armed forces spokesman, was quoted as saying by the semi-official Tasnim news agency.

"And there is no report of any operational response by USS Boxer."

A U.S. official, speaking on condition of anonymity, said the drone on Thursday was brought down through electronic jamming.

CAUTION FROM BOTH SIDES
Gulf tensions are high, with fears the United States and its longtime foe Iran could stumble into war. But despite tough talk on both sides, Washington and Tehran have shown restraint.

Tehran on Thursday signalled a willingness to engage in diplomacy with a modest offer on its nuclear work - ratification of a document prescribing more intrusive nuclear inspections if Washington abandoned its economic sanctions.

While U.S. officials suggested they viewed the idea as a non-starter, analysts said it could provide an opening for Trump's administration to pursue diplomacy.

German Chancellor Angela Merkel said that she was concerned about the situation in the Gulf.

"Of course I'm concerned. You can't look at this region without being concerned at the moment," Merkel told a news conference. "Every opportunity for diplomatic contact should be attempted to avoid an escalation."

In the latest development in a standoff between Iran and Britain that has also stoked Gulf tensions, Gibraltar's supreme court granted a 30-day extension to allow authorities to detain the Iranian oil tanker Grace 1 until Aug. 15.

Iran has vowed to respond to what it calls Britain's "piracy" over the seizure of the vessel.

The tanker was seized earlier this month by British Royal Marines off the coast of the British Mediterranean territory on suspicion of violating sanctions against Syria.

The United States has blamed Iran for a series of attacks since mid-May on shipping around the Strait of Hormuz, the world's most important oil artery. Tehran rejects the allegations.

Iran in June shot down a U.S. military surveillance drone in the Gulf with a surface-to-air missile, saying the drone was in its airspace. Washington says it was in international skies.

The increased use of drones by Iran and its allies for surveillance and attacks across the Middle East is raising alarms in Washington.

Iran's elite Revolutionary Guards said in a statement they would release images to disprove Trump's contention that the U.S. Navy had destroyed a drone.

"Soon, images captured by the Guards drones from the U.S. warship Boxer will be published to expose to world public opinion as lies and groundless the claim," the Guards said.

IRAN OIL EXPORTS DROP
Relations between the United States and Iran have worsened since last year when Trump abandoned a 2015 a nuclear deal between world powers and Tehran. Under the pact, Iran agreed to restrict nuclear work long seen by the West as a cover for developing atomic bombs in return for the lifting of sanctions.

The United States has reimposed sanctions to throttle Iran's oil trade and pressure Tehran to renegotiate the accord, discuss its ballistic missiles and modify its regional policies.

Iranian oil exports have dropped nearly ten fold to around 0.3 million bpd in June from 2.8 million bpd in early 2018.

The United States is struggling to win its allies' support for an initiative to heighten surveillance of vital Middle East oil shipping lanes because of fears it will increase tension with Iran, six sources familiar with the matter said.

Washington proposed on July 9 boosting efforts to safeguard strategic waters off Iran and Yemen where it blames Iran and its proxies for tanker attacks. Iran denies the charges.

But with Washington's allies reluctant to commit new weaponry or fighting forces, a senior Pentagon official told Reuters that the United States' aim was not to set up a military coalition but to shine a "flashlight" in the region to deter attacks on commercial shipping.

By Parisa Hafezi