Intense diplomacy is under way to prepare for new talks between Iran and world powers on Tehran's nuclear programme.
The move comes after weeks of rising tension that fanned fears of conflict in the Gulf and rattled oil markets.
But mistrust runs deep.
Iran yesterday called on the US to commit to talks without preconditions. Washington and the European Union said they were waiting for Iran to show it was ready for serious negotiations.
EU foreign ministers are due to meet on Monday and are expected to agree on an oil embargo against Iran and to freeze the assets of its central bank, France's foreign minister, Alain Juppe said yesterday.
Even so, both Iran and the West in recent days have turned down their rhetoric and moved to ease tensions ahead of any new talks. These are likely to be hosted by Turkey, which is playing a key mediating role.
Speaking in Ankara yesterday, Iran's foreign minister, Ali Akbar Salehi, said Iran has "never in its history" tried to close the Strait of Hormuz. He was rowing back from inflammatory threats that Iran would block the passageway, used for a third of the world's seaborne oil trade, if the West attempts to prevent Iran from selling its own crude. The US has vowed to use force to keep the Strait open.
"We want peace and stability in the region," Mr Salehi said. And he warned Gulf states, which rely on the Strait for their oil and gas exports, not to put themselves in a "dangerous position" by aligning too closely with the US.
Israel and the US on Sunday postponed joint military exercises in the Middle East until later this year. And the US has seemingly persuaded Israel to back off from its threats of military action against Iran's nuclear programme.
Israel's defence minister, Ehud Barak, said on Wednesday any decision on a possible strike on Iranian targets was "very far off".
Iran, meanwhile, is due to host a rare visit by senior officials from the UN's atomic watchdog at the end of this month and said it is open to discuss "any issues".
The International Atomic Energy Agency wants explanations regarding intelligence indicating Iran has engaged in research and development relevant for nuclear weapons.
The looming threat of US and EU sanctions against Iran's oil exports seems to have been the decisive factor in Tehran's decision to return to negotiations.
The last talks between Iran and the five permanent members of the UN Security Council - the US, Russia, China, Britain and France - along with Germany, stalled in Istanbul a year ago when the parties failed to agree even on an agenda.
But, analysts said, the US administration has decided to give diplomacy another shot after looking at the potentially catastrophic effects a conflict with Iran. Given three decades of institutionalised enmity between Tehran and Washington, building trust will be a key element in new negotiations.
The West suspects Iran's offer to talk is a stalling tactic to undermine sanctions while it presses ahead with its nuclear programme.
Iran is equally suspicious. "Out in the open they [the US] show their muscles but behind the scenes they plead to us to sit down and talk," Mr Salehi said. "America has to pursue a safe and honest strategy so we can get the notion that America this time is serious and ready."
The West will reportedly propose a confidence-building measure that would require Iran to halt enriching uranium to 20 per cent and turn over its stockpile of nuclear fuel enriched to that level. In exchange, Western powers would agree not to pass another UN Security Council resolution sanctioning Iran, analysts and diplomats told Laura Rozen, a well-connected journalist at Yahoo News.
Russia and China are vehemently opposed to new sanctions. Russia's foreign minister, Sergey Lavrov, accused western powers on Wednesday of trying to "suffocate" the Iranian economy and incite popular unrest.
He suggested their punitive new measures were designed to torpedo any new talks. Hopes of a breakthrough are not high.
"Just because there's an interest in talks doesn't mean there's an interest in compromise," said Trita Parsi, president of the National Iranian American Council.
"Both sides are coming to the talks hoping they can strong-arm the other side into submission. You're more likely going to see an exchange of ultimatums than a real negotiation," Mr Parsi, author of a new book, A Single Roll of the Dice: Obama's Diplomacy with Iran, said.
Despite overseeing the toughest US sanctions imposed on Iran, the US president, Barack Obama, is accused by his Republican opponents of being soft on the Islamic Republic.
Scott Lucas, an Iran expert at Birmingham University in England, said "the issue is not just the US versus Iran but internal tensions in both Washington and Tehran".
"People in both capitals will be promoting negotiations, but they will be opposed by others every step of the way," he said.