Mohsen Rezaei, a member of Iran’s Expediency Council and one of the regime’s most prominent hardline voices, said Thursday, May 7, 2026, via the state news agency PressTV that the United States must pay reparations for damage done to Iran before any settlement of the conflict can proceed. Rezaei said Tehran will not allow the United States to dictate terms unilaterally and that the Iranian people will not accept a deal that does not address what he called “the criminal damages” inflicted by U.S. and Israeli operations.
The remarks complicate — though they have not derailed — the 14-point memorandum of understanding currently being finalized between U.S. negotiators and the Iranian Foreign Ministry. Sec. of State Marco Rubio has said the U.S. expects Iran’s formal response to the memorandum within days. Iranian Foreign Minister Abbas Araghchi traveled to Beijing on Tuesday May 5 as China continues to mediate U.S.-Iran negotiations in parallel with the Pakistan back channel.
Rezaei’s position is significant for institutional reasons. The Expediency Council is a constitutional body that arbitrates between the Iranian Parliament and the Guardian Council and provides advice to the Supreme Leader. Its members do not have direct executive power, but they shape the regime’s acceptable range of policy outcomes. A vocal demand for reparations from a senior Expediency Council member functions as a public floor on Iranian negotiating concessions: any deal that emerges must be politically defensible against the “reparations first” framing now circulating in Tehran.
The U.S. position has been that the memorandum already addresses Iranian economic damage indirectly through sanctions relief and the release of frozen Iranian funds — estimated at upwards of $80 billion across U.S., U.K., and South Korean banks. The Iranian counter-position, articulated by Rezaei, is that frozen funds belong to Iran by definition and that returning them does not constitute compensation for war damages. Whether this distinction blocks the deal will depend on how Iranian Supreme Leader Mojtaba Khamenei chooses to handle it in the formal response.
Markets have priced in the possibility of friction without panicking. Brent crude pulled back slightly on Thursday to close at $100.06 per barrel after the Rezaei remarks were translated and circulated, though both crude benchmarks remained well below their May 4 highs of $105 WTI and $114 Brent. ANZ Research noted in a Friday client note: “The risk of a proposed U.S. peace deal breaking down will likely keep oil markets volatile.” Goldman Sachs and Barclays both kept their reduced Q4 Brent forecasts ($90 and $100 respectively) despite the hardline pushback.
Iran’s domestic political calculus is more complex than it appears from Washington. The conflict has imposed enormous costs on the Iranian economy and population: shortages, inflation, blackouts, and the loss of Supreme Leader Ali Khamenei in the late February strikes. A deal that lifts sanctions and reopens commerce serves an immediate Iranian interest. But signing under U.S. terms without a face-saving frame risks destabilizing the regime at a moment when its grip on internal politics is already tested.
The next 72 hours are decisive. If Iran accepts the memorandum substantially as drafted, the conflict ends and Hormuz reopens within weeks. If Iran returns with reparations demands as a precondition, the U.S. likely walks; the blockade continues; and crude moves sharply higher again. Markets are pricing roughly 60–70% probability of a deal on Kalshi-style prediction markets. President Trump’s Beijing visit, scheduled for next week, will function as a hard deadline either way. For continuing coverage, see our geopolitics dashboard.