Senior US and Iranian negotiators were preparing for high-level talks in Islamabad set to begin Saturday, an effort aimed at shoring up a fragile ceasefire as exchanges of fire continue between Israel and Hezbollah and as Iran exerts control over the Strait of Hormuz.
US Vice-President JD Vance was due to leave Washington as Tehran remained publicly tight-lipped about its delegation, a posture intended to increase pressure on Washington to push Israel to stop strikes in Lebanon. Semiofficial Iranian outlet Tasnim, close to the Islamic Revolutionary Guard Corps, warned the talks could be suspended if Israeli attacks continued.
Threats to navigation in the Strait of Hormuz persisted. Ship-tracking firm Kpler said several tankers and bulk carriers had moved through the strait since the truce, but Tehran’s near-total blockade appeared intact. Semiofficial reports suggested Iran may have mined parts of the waterway. One Botswana-flagged LNG tanker, the Nidi, attempted a route ordered by the Revolutionary Guard but turned back, highlighting Iran’s de facto control.
Despite the ceasefire, Israel continued strikes on Hezbollah positions in Lebanon. Israeli leaders signalled a willingness to hold talks with Lebanon: Prime Minister Benjamin Netanyahu authorised negotiations, raising cautious hopes for broader de-escalation. Iran’s parliament speaker, Mohammad Bagher Qalibaf—whose name has been floated as a possible negotiator to meet Vance—said further Israeli attacks would bring “explicit costs and strong responses.”
The ceasefire showed signs of strain as both sides applied pressure. Washington accused Tehran of violating commitments over the Strait of Hormuz. US President Donald Trump said Iran was doing a “very poor job” of allowing oil shipments and vowed that oil would flow again, without detailing steps, and warned US forces would strike harder if the agreement collapsed.
Kuwait accused Iran and allied proxies of launching drone attacks on its territory despite the truce; Iran’s Revolutionary Guard denied involvement and suggested third-party actors might be responsible. Iran-backed militias across the region have previously given Tehran plausible deniability for such operations.
Markets and energy policy continued to feel the conflict’s ripple effects. Asian stocks looked set for their best week since 2022 amid hopes that Israel-Lebanon talks could ease tensions and reopen shipping. The dollar was headed for a weekly decline as other currencies strengthened on optimism the ceasefire might hold. Japan announced a second release of emergency oil reserves—equal to about 20 days’ supply to be distributed in May—to counter supply uncertainty, and Australia and Singapore pledged closer energy cooperation to stabilise disrupted supplies.
Pakistan moved to facilitate the Islamabad talks by offering visas on arrival for participants, though the precise arrival times of US and Iranian delegations remained unclear. Pakistan’s prime minister had previously announced the two-week ceasefire and scheduled the diplomatic meetings.
Security concerns extended beyond the Gulf: residents near Tehran and elsewhere in Iran reported hearing sounds like air-defence fire and explosions overnight, though Iranian authorities did not confirm any attacks. Ukrainian President Volodymyr Zelenskyy said Ukrainian forces had intercepted Iranian-designed Shahed drones in several Middle Eastern countries as part of broader efforts to help partners counter those weapons.
The aviation sector voiced growing alarm. Airline pilots told a global union they risked penalties, lost pay or even dismissal if they refused to fly Middle East routes amid missile and drone threats and sudden airspace closures.
Economic strains were also evident at home. US consumer prices were expected to rise in March, in part because of higher oil prices tied to the conflict, reducing the likelihood of an interest-rate cut this year.
As the Islamabad talks approached, governments and markets watched for signs the ceasefire could be reinforced. The meeting faces significant obstacles: Israel’s ongoing military action in Lebanon, Iran’s demand for those strikes to stop, unresolved questions about freedom of navigation in the Strait of Hormuz, and continued regional attacks and denials that together test the durability of the agreement.
