U.S. President Donald Trump has indicated peace talks with Tehran could resume this week, as the United States turned the screws Wednesday with a naval blockade it said had cut off maritime trade with Iran.
Trump's hint came as Israel and Lebanon agreed to open direct negotiations after a rare face-to-face meeting in Washington, with Israel's war with Hezbollah ongoing despite the ceasefire with Tehran.
Stocks rose and crude dropped on hopes for a deal to get oil flowing again through the Strait of Hormuz -- choked by Iranian forces since the U.S.-Israeli offensive began in late February, and now the focus of a U.S. blockade.
But the twin diplomatic push remained fragile, with Lebanese state media reporting fresh Israeli strikes south of Beirut, while Iran-backed Hezbollah -- hostile to any negotiations -- fired dozens of rockets at Israel.
Trump told the New York Post on Tuesday that a new round of talks with Iran could take place in Pakistan "over the next two days," after a marathon first negotiating session ended without a breakthrough.
In a FOX Business interview due to be aired on Wednesday, the U.S. leader declared the war "very close to being over".
Senior Pakistani sources told AFP that Islamabad was working to bring the sides together for a second round of talks, as Prime Minister Shehbaz Sharif kicked off a four-day diplomatic blitz to Saudi Arabia, Qatar and Turkey.
In the meantime Washington has been pressing hard for an end to the Israel-Hezbollah conflict, fearing it could jeopardise its two-week ceasefire with Iran and a broader settlement of the conflict.
Lebanon was drawn into the war when Hezbollah attacked Israel in support of Iran, triggering an Israeli ground invasion and deadly campaign of strikes.
The countries' ambassadors met in Washington on Tuesday in their first direct, high-level talks since 1993, mediated by U.S. Secretary of State Marco Rubio.
Israel's envoy Yechiel Leiter hailed "a wonderful exchange" between parties "united in liberating Lebanon" from Hezbollah -- although his Lebanese counterpart Nada Hamadeh Moawad was less effusive, calling the talks "constructive" but saying she had pressed for a ceasefire.
The State Department said "all sides agreed to launch direct negotiations at a mutually agreed time and venue."
Israel is occupying parts of southern Lebanon and has resisted any pause in fighting that leaves Hezbollah intact, arguing that the group remains the central obstacle to peace.
- Pressure on Tehran -
While diplomatic efforts between the United States and Iran have been stop-start, Washington has sought to turn up the pressure on Tehran by blockading its ports.
U.S. Central Command said on social media overnight that its blockade had been "fully implemented" and that American forces "have completely halted economic trade going into and out of Iran by sea."
The picture based on maritime tracking data Tuesday was less clear-cut -- indicating that several ships sailing from Iranian ports had crossed the Hormuz Strait despite the blockade.
Analysts say Trump is aiming not only to choke off Iranian revenue but also to pressure China, the biggest buyer of Iran's oil, to push Tehran to reopen the strait.
Chinese President Xi Jinping was hosting Russia's top diplomat Sergei Lavrov on Wednesday, with both countries pledging to work together towards de-escalation in the Middle East.
- 'Grand bargain' -
The decades-old dispute over Tehran's nuclear program lies at the heart of the U.S.-Iran talks process -- with Vice President JD Vance saying Tuesday the Islamic republic was being offered a "grand bargain".
Trump has insisted any deal must permanently bar Iran from becoming nuclear-armed. He launched the war arguing that Tehran was rushing towards the completion of an atomic bomb, an assertion not backed by the U.N. nuclear watchdog.
Tehran has always insisted its nuclear program is for civilian purposes.
Reports said the United States sought a 20-year suspension of Iran's uranium enrichment programme during the Islamabad talks, and that Iran, in turn, proposed suspending its nuclear activity for five years -- an offer U.S. officials rejected.
At an event in the U.S. state of Georgia on Tuesday, Vance said Trump had pledged to "make Iran thrive" if it committed to "not having a nuclear weapon".
"That's the kind of Trumpian grand bargain that the president has put on the table," Vance said, adding: "Man, we're going to keep on negotiating and try to make it happen."
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