US, Iran seek further talks as Hormuz standoff intensifies

The U.S. and Iran are closer to extending a ceasefire and restarting negotiations about a longer-term peace deal, the Associated Press reported, even as a standoff intensifies over the Strait of Hormuz.

The two sides have an “in principle agreement” to pursue further diplomacy after an inconclusive initial round of talks in Pakistan at the weekend, the AP said, citing regional officials it didn’t identify. Mediators are pushing for a compromise on outstanding issues including Hormuz and Iran’s nuclear program before the April 7 truce expires next week, the news agency said.

U.S. President Donald Trump played down the prospect of renewed fighting on Tuesday, telling Fox Business that the near seven-week war is “close to over.”

Even so, tension remains high over Hormuz, with a U.S. naval blockade cutting off Iranian oil flows in the strategic waterway, while Tehran keeps the strait closed off to other shipments.

Iran sees a prolonging of the U.S. blockade as “a prelude to a breach of the ceasefire,” said Ali Abdollahi, the commander of Iran’s joint military headquarters, according to state TV. Iran’s armed forces “will not permit any exports or imports to continue in the Persian Gulf, the Sea of Oman or the Red Sea” if the blockade continues, he said.

Oil prices remain elevated, with Brent crude trading 0.9% higher at just under $96 barrel on Wednesday, about 33% higher than before the start of the war.

Trump has vacillated throughout the war between declaring it all but over and threatening a major escalation, and many questions remain about the issues that drove the U.S. and Israel to start their bombardment of the Islamic Republic.

Chief among those is the future of Iran’s nuclear program. Israel maintains Tehran’s stockpile of highly enriched uranium must be removed, while Trump told the New York Post he’s unhappy about reports that the U.S. proposed a two-decade moratorium on enrichment as part of the Pakistan talks, saying Iran can never be allowed to have nuclear weapons.

The whereabouts of Iran’s uranium has been unknown since the U.S. and Israel bombed the country’s nuclear facilities in June, and International Atomic Energy Agency inspectors have been barred access since then. Iran has always said it isn’t pursuing a weapons program.

A second issue is the standoff over Hormuz, through which about a fifth of the world’s oil and liquefied natural gas was shipped before the war. Iran has kept the chokepoint closed to all but its own crude since the start of the fighting, triggering a global supply crisis, and has said it wants to maintain control even after the conflict is over.

The U.S. began a naval blockade of Hormuz on Monday to curb the Islamic Republic’s oil exports, and U.S. Centcom has said it’s been fully implemented since going into effect.

The navy has been impeding traffic outside the strait in the Gulf of Oman and appears to have forced some carriers, including the U.S.-sanctioned Rich Starry, to make a U-turn back toward the Persian Gulf. An Iraq-bound supertanker sailed through the waterway on its second attempt, making it the first crude carrier to head west through the conduit since the U.S. blockade began.

An Iranian supertanker sailed through the strait into Iranian waters despite the blockade, Iran’s semi-official Fars news agency reported, without identifying the vessel. The passage wasn’t confirmed by the U.S.

The U.S. is using more than a dozen vessels to enforce the blockade. They include the USS Tripoli amphibious assault ship, accompanied by F-35 jets and Marine vessels for boarding operations, as well as the USS Canberra littoral combat ship that could help clear sea mines.

The Trump administration will allow a waiver that temporarily authorizes the purchase of certain Iranian crude oil to expire this weekend, the Treasury Department said. A similar waiver for Russian crude, part of efforts to ease global energy shocks from the war, lapsed last week.

China’s CSI 300 Index became the latest gauge to recoup losses since the conflict started on Feb. 28, joining Taiwan and Singapore. Wall Street benchmarks have already reclaimed those levels, with the S&P 500 closing in on its record high set in late January.

While crude oil has come off wartime highs, U.S. gasoline and diesel prices remain at their highest seasonal levels ever, a pain point for consumers ahead of summer travel.

Iran’s missile attacks have caused extensive damage to Gulf energy infrastructure and the Hormuz closure has disrupted oil and gas supplies beyond the region, issues that could take some time to iron out.

That’s triggered fears of a global inflation crisis. Surging prices of products such as jet fuel and gasoline are already squeezing consumers, the International Energy Agency said Tuesday, pointing toward the first annual decline in global oil demand since 2020.

Fighting has largely paused since the truce was announced on April 7, except in Lebanon, where Israel continues operations against Iran-backed Hezbollah. Talks between Israel and Lebanon began Tuesday in Washington to address the parallel conflict, which has killed more than 2,000 people, according to Lebanese authorities.

Israel’s spy chief pledged more covert efforts to try to topple Iran’s government, suggesting the countries’ conflict will continue even if the U.S. agrees to a peace deal. “Our mission has yet to be completed,” David Barnea, the head of Mossad, said in a speech.

Trump told ABC News that, while an official peace agreement may not be necessary, “I think a deal is preferable because then they can rebuild.”

“They really do have a different regime now. No matter what, we took out the radicals,” he said.

Several senior Iranian leaders, including Supreme Leader Ali Khamenei, have been killed in U.S.-Israeli strikes. There’s no indication Khamenei’s son and successor, Mojtaba Khamenei, represents a different kind of leadership.