Despite last week’s ceasefire seeming to hold steady, tensions over the Strait of Hormuz threaten to spark renewed hostilities, exacerbating the economic impact of the ongoing regional conflict.

In a significant diplomatic move, direct negotiations between Israel and Lebanon are set to commence in Washington. These talks mark the first such engagement in decades, offering a glimmer of hope for progress in the long-standing conflict.

Efforts to resolve the unrest in Iran, which escalated on February 28 following U.S. and Israeli military actions, have yet to yield a lasting agreement. However, Pakistan has extended an offer to host a subsequent round of discussions in the coming days, keeping diplomatic channels open.

According to two Pakistani officials, who requested anonymity due to the sensitivity of the matter, the initial talks are part of a continuous diplomatic initiative rather than a singular attempt at resolution.

Two U.S. officials confirmed on Monday that discussions about organizing a new set of talks are ongoing. A diplomat from one of the countries involved in mediating these efforts noted that both Tehran and Washington have consented to this potential next step.

Two US officials said on Monday that discussions were still underway about a new round of talks. A diplomat from one of the mediating countries said that Tehran and Washington had agreed to it.

The talks could happen on Thursday, according to the US officials. The location, timing and composition of the delegations had not been decided, although Islamabad and Geneva are being considered as host cities.

The US officials and the diplomat spoke on condition of anonymity to discuss sensitive diplomatic negotiations.

The war, now in its seventh week, has jolted markets and rattled the global economy as shipping has been cut off and airstrikes have torn through military and civilian infrastructure across the region.

The fighting has killed at least 3000 people in Iran, more than 2000 in Lebanon, 23 in Israel and more than a dozen in Gulf Arab states. Thirteen US service members have also been killed.

Tankers turned around after blockade took effect

The blockade is intended to pressure Iran, which has exported millions of barrels of oil, mostly to Asia, since the war began. Much of it has likely been carried by so-called dark transits that evade sanctions and oversight, providing cash flow that’s been vital to keeping Iran running.

Both the nature of enforcement and the extent to which ships will comply remained unclear during the first full day of the blockade on Tuesday. Tankers approaching the strait on Monday turned around shortly after it took effect, though one reversed course again and transited the waterway early on Tuesday.

The tanker Rich Starry had been waiting off the coast of the United Arab Emirates, according to shipping data firm Lloyd’s List, which cited data from the energy cargo-tracking firm Vortexa. It was not immediately clear whether the tanker had earlier docked in Iran. Yet it was listed by the US Treasury’s Office of Foreign Assets Control as linked to Iranian shipping.

Lloyd’s List, citing ship registry and tracking data, reported that the vessel is owned by a Chinese shipping company and ultimately bound for China.

US Central Command did not immediately respond to questions about the tanker after it cleared the nearly 34-kilometre waterway. A day earlier, Central Command said the blockade applied to vessels going to and from Iranian ports.

Since the start of the war, Iran has curtailed maritime traffic, with most commercial vessels avoiding the waterway.

Iran’s effective closure of the strait, through which a fifth of global oil transits in peacetime, has sent oil prices skyrocketing, pushing up the cost of gasoline, food and other basic goods far beyond the Middle East.

US President Donald Trump on Monday said that Iran’s control of the strait amounted to blackmail and extortion as the US blockade took effect. He said in a social media post that Iran’s navy had been “completely obliterated,” but still had “fast attack ships.”

He warned that “if any of these ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED.”

Iran threatened to retaliate against Persian Gulf ports if attacked.

“If you fight, we will fight,” Iran’s parliamentary speaker, Mohammad Bagher Qalibaf, said in a statement addressed to Trump.

French President Emmanuel Macron and British Prime Minister Keir Starmer will co-chair a conference on Friday for nations willing to deploy warships to escort oil tankers and container ships through the Strait of Hormuz.

The deployment will happen “when security conditions allow,” Macron’s office said on Tuesday.

Israel and Lebanon scheduled for talks

The talks in Washington between Israel and Lebanon were expected to be preliminary, focused on setting parameters rather than resolving core issues.

After more than a year of near-daily strikes in southern Lebanon, Israel escalated its offensive in the early days of the Iran war following Hezbollah launching rockets into Israel. The fighting has carved a path of destruction from agricultural towns near the border to Beirut, killing more than 2000 people and displacing in excess of 1 million others, according to Lebanese authorities.

After the ceasefire in Iran, Israel pressed ahead with its air and ground campaign, insisting that the truce does not apply to fighting in Lebanon. It has, however, halted strikes in the country’s capital since April 8, after a deadly bombardment that hit several crowded commercial and residential areas in central Beirut. It sparked an international outcry and threats by Iran that it would end the ceasefire.

Lebanese officials have pushed for a ceasefire. Israel has framed the negotiations around Hezbollah’s disarmament and a potential peace deal, without publicly committing to halting hostilities or withdrawing its forces.

Israel wants Lebanon’s government to assume responsibility for disarming Hezbollah, much as was envisaged in a November 2024 ceasefire. But the militant group has survived efforts to curb its strength for decades and said on Monday that it will not abide by any agreements that may result from the talks.

Israeli Foreign Minister Gideon Saar on Tuesday floated the idea of cooperation with the Lebanese government to dismantle Hezbollah.

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