U.S. weighs redirecting frozen Iranian assets to fund Gulf reconstruction

The United States is weighing plans to redirect frozen Iranian assets toward Gulf states damaged by Iranian attacks since February, The Korea Times reported Sunday, citing multiple American media outlets.

The deliberations place Washington in a diplomatically fraught position: Tehran has made the release of those same frozen assets a core demand in ongoing ceasefire negotiations, meaning any U.S. decision to deploy the funds for reconstruction could directly undercut Iran's negotiating leverage.

Treasury Secretary Scott Bessent has commissioned comprehensive damage assessments for reconstruction since the war began Feb. 28, according to The Korea Times. Options under examination include redirecting funds from frozen Iranian bank accounts or physical assets such as oil tankers, the report said.

Iran most recently launched attacks on Kuwait and Bahrain early Saturday, despite a ceasefire that nominally took effect April 8. The Korea Times, citing multiple U.S. media outlets, reported that mutual strikes have continued since the nominal truce began.

U.S. military bases in the Gulf region are located just a few hundred kilometres from Iran, underscoring the strategic stakes for American forces stationed alongside their Gulf host nations.

Tehran's insistence on frozen-asset release as a condition for talks adds a further complication. Should Washington decide to use those holdings to fund reconstruction, it would effectively foreclose one of Iran's primary demands at the negotiating table.

The scope of Iranian assets under consideration — whether bank accounts, oil tankers or other holdings — has not been publicly disclosed, according to The Korea Times.

U.S. officials have not made any formal announcement on the deliberations, and it remains unclear what specific categories of Iranian assets are under consideration, The Korea Times reported.