What had looked like a concrete diplomatic mission unravelled in real time on Tuesday, as a second round of US-Iran peace talks in Islamabad appeared to stall before it even began. Vice President JD Vance — who had been expected to leave for Pakistan that morning — arrived at the White House for meetings, with Defence Secretary Pete Hegseth and Secretary of State Marco Rubioalso seenentering the West Wing.
Market analystAdam Cochranreported on X that flight-tracking data showed the US government plane scheduled to take Witkoff and Kushner to Islamabad appeared to have turned back mid-air, after a market sell-off struck around 11 am. 'Something fell apart,' Cochran wrote.
The disruption came with the US-Iran truce on the verge of expiry. Trumpsaidhe now considers the two-week ceasefire to end 'Wednesday evening Washington time,' extending the pause by 24 hours — though he added it was 'highly unlikely' he would extend it further. In a phone interview cited in the Bloomberg Radio segment, Trump alsodeclared: 'I have it closed. I took their ship. I got five other ships I'll take today if I have to' — a reference to the US Navy's seizure of an Iranian-flagged cargo ship in the Gulf of Oman over the weekend, the first such move during the US blockade.
In a separate interview, Trumpsaidhe would not open the Strait of Hormuz until a deal with Tehran was reached, and when asked whether he expected fighting to resume if no agreement was found, said: 'If there's no deal, I would certainly expect.'
The diplomatic turbulence is feeding directly into market anxiety. Speaking on Bloomberg Radio on Monday, Republican RepresentativeNicole Malliotakisof New York acknowledged that while 'the United States does have the upper hand' in negotiations, there were 'two different things' at play: the strategic logic of the talks and the political pressure building at home. 'The sooner we can get a deal and reopen the strait and allow for oil to be flowing,' she said, 'it's going to be very critical and it'll really dictate where gas prices are going to be going.'
With the national average sitting at $4.04 (£3.08) per gallon and New York at $4.10 (£3.13), Malliotakis said constituents were asking one question above all others: 'How much is this costing me?' She added that the talks were 'very high stakes' given global economic volatility, and said she was 'very hopeful' that the next 48 hours would bring clarity on where negotiations were heading. Oil markets reflected that uncertainty, with Brent crude trading near $95 (£72.44) a barrel as of Monday afternoon in New York, up more than 5% on the day.
Iran's reluctance to return to the table centred on a firm condition. Tehran signalled that the US blockade of Iranian ports needed to be lifted before another round of direct negotiations could proceed, with Trumpsayingthat same morning: 'We're not going to open the strait until we have a final deal.'
A person familiar with the discussions said the Iranians were stalling amid pressure from the Revolutionary Guards to hold a firmer line, insisting on no talks without an end to the blockade. Pakistani, Egyptian and Turkish mediators spent all of Monday urging Iran to come to the table, with the Iranian team waiting for a green light from the supreme leader. Iran's Foreign Ministry framed it differently, with its spokesmanEsmaeil Baghaeisaying the hesitation was not down to indecision but to 'contradictory messages, contradictory behaviours, and unacceptable actions by the American side.'
Iranian PresidentMasoud Pezeshkianhad also posted on X, warning of 'deep historical mistrust' of the US, saying signals from American officials amounted to seeking the country's surrender. 'Iranians do not submit to force,' he wrote.
Vance, Witkoff and Kushner were all set to depart for Islamabad.At around 11AM we had a market sell off.We later find out Trump is hosting an 'emergency meeting' at the White House, where Vance's motorcade was seen.And the plane carrying Witkoff and Kushner departing Miami,…https://t.co/3agRcXhzPa
Source: International Business Times UK
