Negotiators from the US and Iran could return to Islamabad this week to resume talks to end the war, sources told Reuters on Tuesday, after the collapse of weekend negotiations prompted Washington to impose a blockade on Iranian ports.
While the US blockade drew angry rhetoric from Tehran, signs that diplomatic engagement might continue helped calm oil markets, pushing benchmark prices below $100 on Tuesday.
The highest-level talks between the two adversaries since the 1979 Islamic Revolution ended in the Pakistani capital without a breakthrough at the weekend, raising doubts over the survival of a two-week ceasefire that still has a week to run.
However, a source involved in the talks said on Tuesday both countries could return as early as the end of this week, and that a proposal had been shared with Washington and Tehran to resend their delegations.
"No firm date has been set, with the delegations keeping Friday through Sunday open," a senior Iranian source said.
US President Donald Trump said Iran had been in touch on Monday and wanted to make a deal, adding that he would not sanction any agreement that allowed Tehran to possess a nuclear weapon.
Since the United States and Israel began the war on February 28, Iran effectively shut the Strait of Hormuz to nearly all vessels except its own, saying passage would be permitted only under Iranian control and subject to a fee. Nearly a fifth of global oil and gas supplies previously flowed through the narrow waterway, making the fallout widespread.
In a countermeasure, the US military said it began blocking shipping traffic in and out of Iran's ports on Monday. Tehran has threatened to hit naval ships going through the strait and to retaliate against its Persian Gulf neighbours' ports.
A day into the US blockade, there had yet to be reports of Washington taking direct action against shipping to enforce it.
Shipping data showed at least three Iran-linked tankers transiting the Strait of Hormuz that were not heading to or from Iranian ports.
The latest measures have further clouded the outlook for global energy security and the supply of goods that rely on petroleum.
On Tuesday, the International Monetary Fund cut its growth outlook, citing price spikes and supply disruptions driven by the war, and said the global economy would teeter on the brink of recession if the conflict worsens and oil stays above $100 per barrel through 2027.
The International Energy Agency sharply cut its forecasts for global oil supply and demand growth, saying both are now expected to fall from 2025 levels.
The United States' NATO allies including Britain and France said they would not be drawn into the conflict by taking part in the blockade, although they have offered to help safeguard the strait by drawing together a defensive multilateral mission to assist when an agreement is in place.
China, the main buyer of Iranian oil, said the US blockade was "dangerous and irresponsible" and would only aggravate tensions.
US Vice President JD Vance, who led Washington's delegation opposite Iranian parliamentary speaker Mohammad Baqer Qalibaf, said on Monday that Iranian negotiators had shown some movement but fell short.
He said Trump was adamant that any enriched nuclear material must be removed from Iran and a mechanism must be established to verify that Iran is not developing nuclear weapons.
Israeli Foreign Minister Gideon Saar echoed that position on Tuesday, speaking to reporters in Jerusalem: "We will never allow Iran to obtain nuclear weapons," he said. "The enriched materials must be removed from Iran."
Complicating Pakistan's efforts to mediate an end to the war, Israel has continued targeting Iran-backed Hezbollah in Lebanon. Israel and the United States say that campaign is not covered by the ceasefire, while Iran has insisted it is.
Israeli and Lebanese envoys were to meet in Washington on Tuesday in a rare encounter also expected to be attended by Secretary of State Marco Rubio. Lebanon's government has sought negotiations with Israel despite objections from Hezbollah.
The ceasefire has largely held over its first week despite sharp rhetoric from both sides.
An Iranian military spokesperson called any US restrictions on international shipping "piracy," warning that if Iranian ports were threatened, no port in the gulf or Gulf of Oman would be secure.
Trump said Iran's navy had been "completely obliterated" during the war, adding that only a small number of "fast-attack ships" remained.
"Warning: If any of these ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED," Trump wrote on social media.
The US military's Central Command said the blockade would be enforced on vessels entering or leaving Iranian ports in the gulf and Gulf of Oman. It would not impede neutral transit passage through the Strait of Hormuz to or from non-Iranian destinations, it said in a note to seafarers.
(Reporting by Reuters bureaux, Writing by Ros Russell; Editing by Peter Graff)