Fears grew Monday that the U.S.-Iran truce could collapse after Washington said it seized an Iranian cargo ship attempting to breach its blockade and Tehran vowed to retaliate.
Efforts to build a more lasting peace in the region also appeared under threat, as Iran said it would not participate in a second round of negotiations that the U.S. had hoped to kick off before the cease-fire expires.
The U.S. has maintained a blockade of Iranian ports while Iran has lifted and then reimposed its own blockade on marine traffic passing through the Strait of Hormuz, which typically handles roughly one-fifth of the world's oil supply.
The U.S. military said it fired on an Iranian-flagged cargo ship headed towards Iran's Bandar Abbas port Sunday after a six-hour standoff, disabling its engines.
U.S. Marines then rappelled from helicopters onto the vessel, U.S. Central Command said.
"We have full custody of their ship, and are seeing what's on board!" President Trump wrote on social media.
Iran's military said the ship had been traveling from China. "We warn that the armed forces of the Islamic Republic of Iran will soon respond and retaliate against this armed piracy by the U.S. military," a military spokesperson said, according to state media.
Oil prices jumped more than 5% and stock markets wobbled as traders fretted that the cease-fire would collapse and traffic in and out of the Gulf would remain at a bare minimum.
Iranian state media reported that Tehran had rejected new peace talks, citing the ongoing blockade, threatening rhetoric and Washington's shifting positions and "excessive demands."
"One cannot restrict Iran's oil exports while expecting free security for others," Iran's First Vice President Mohammadreza Aref wrote on social media. "The choice is clear: either a free oil market for all, or the risk of significant costs for everyone."
Trump earlier warned Iran that the U.S. would destroy every bridge and power plant in Iran if Tehran rejected his terms, continuing a recent pattern of such threats.
Iran has said that if the United States were to attack its civilian infrastructure, it would hit power stations and desalination plants of Gulf Arab neighbors.
Trump said his envoys would arrive in Islamabad Monday evening, one day before a two-week cease-fire ends.
A White House official told Reuters the U.S. delegation would be headed by Vice President JD Vance, who led the war's first peace talks a week ago, and also include Trump's envoy Steve Witkoff and son-in-law Jared Kushner. But Trump told ABC News and MS Now that Vance would not go.
Pakistan, which has served as the main mediator, was still gearing up for the talks Monday.
Nearly 20,000 police, paramilitary and army personnel have been deployed across the capital, Islamabad, a government and a security official said, adding that the area around the venue for the second round of talks had been vacated.
Public transport across the city has also been suspended.
"Special security measures have been taken for all of our special guests," Pakistan's Interior Minister Mohsin Naqvi said in a statement, adding that he had briefed U.S. Ambassador Natalie Baker on the security measures for the talks.
Iran's parliament speaker, Mohammad Bagher Ghalibaf, who has led Iran's side in the talks, had earlier said the two sides had made progress but were still far apart on nuclear issues and the Strait.
European allies, repeatedly criticized by Trump for not aiding his war effort, worry that Washington's negotiating team is pushing for a swift, superficial deal that would require months or years of technically complex follow-on talks.
Now in its eighth week, the war has created the most severe shock to global energy supplies in history, sending oil prices surging because of the de facto closure of the strait.
Thousands of people have been killed by U.S.-Israeli strikes on Iran and in an Israeli invasion of Lebanon conducted in parallel since the war began on Feb. 28.
Iran responded to the attacks with missiles and drones against Israel and nearby Arab countries that host U.S. bases. The Islamic Republic executed two men convicted of cooperating with Israel’s Mossad intelligence service and planning attacks inside the country, the judiciary's news outlet Mizan reported Sunday.
