Global attention turns to the future of the Middle East ceasefire following the US seizure of an Iranian cargo vessel

Concerns intensified on Monday over the durability of the ceasefire between the United States and Iran after Washington announced it had seized an Iranian cargo ship that allegedly attempted to breach its blockade, prompting Tehran to threaten retaliation.

Prospects for a more lasting peace also appeared uncertain, with Iran declining to take part in a second round of negotiations that the US had hoped to launch before the truce expires on Tuesday.

The US continues to enforce a blockade on Iranian ports, while Iran has alternated between lifting and reimposing restrictions on shipping through the strategically vital Strait of Hormuz, which typically carries about one-fifth of global oil supply.

The US military said on Sunday it fired on an Iranian-flagged cargo vessel as it headed toward Bandar Abbas. “We have full custody of their ship and are inspecting its contents,” President Donald Trump wrote on social media.

Iran’s military said the ship had been traveling from China and warned of an imminent response. A spokesperson described the incident as “armed piracy” by US forces and vowed retaliation, according to state media.

Markets reacted sharply, with oil prices rising and stock markets wavering amid fears that maritime traffic in and out of the Gulf could remain severely restricted.

Iran rejects new talks

Iranian state media reported that Tehran has rejected fresh peace talks, citing the ongoing blockade, hostile rhetoric, and what it described as Washington’s inconsistent stance and “excessive demands.”

“One cannot restrict Iran’s oil exports while expecting free security for others,” First Vice President Mohammadreza Aref said on social media. “The choice is clear: either a free oil market for all, or significant costs for everyone.”

Earlier, Trump warned that the US could target critical infrastructure across Iran if Tehran refused his terms, continuing a pattern of stark threats. Iran has in turn said it would strike power and desalination facilities in Gulf Arab states hosting US bases if attacked.

Uncertain diplomacy

Trump said US envoys would arrive in Islamabad on Monday evening, just a day before the two-week ceasefire is due to expire. A White House official indicated the delegation would include Vice President JD Vance, envoy Steve Witkoff, and adviser Jared Kushner, though Trump later suggested Vance might not attend.

Pakistan, acting as the primary mediator, appeared to be preparing for the talks. Security measures were ramped up in the capital, including restrictions on transport and tightened controls around key locations such as the Serena Hotel Islamabad, where earlier discussions took place.

Now in its eighth week, the conflict has delivered a severe shock to global energy markets, with oil prices surging due to the effective disruption of traffic through the strait. Thousands have reportedly been killed in US-Israeli strikes on Iran and in a parallel Israeli offensive in Lebanon since the war began on February 28. Iran has retaliated with missile and drone attacks targeting Israel and nearby Arab states hosting US bases.

Iran’s parliament speaker Mohammad Baqer Qalibaf, who has led Tehran’s negotiating team, previously said that while some progress had been made, significant gaps remain, particularly over nuclear issues and control of the strait.

European allies, often criticized by Trump for limited support, are concerned that Washington may be pushing for a quick, superficial agreement that would leave complex technical issues unresolved for months or even years.