Ceasefire Hangs in Balance After United States Intercepts Iran Ship, Talks in Doubt

Concerns grew on Monday that the ceasefire between the United States and Iran might collapse after the U.S. said it had seized an Iranian cargo ship that tried to run its blockade and Iran 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 ceasefire 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 on 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 ceasefire would collapse and traffic in and out of the Gulf would remain at a bare minimum.

Talks in Limbo

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.

Iran’s top diplomat, moreover, has told his Pakistani counterpart that Washington’s demands in negotiations and its threats to Iranian ships and ports mark “clear signs” of America’s disingenuousness.

Abbas Aragchi made the remarks in a phone call to Pakistan’s foreign minister, Ishaq Dar, according to Iranian state media.

Despite the uncertainty, Pakistan was still gearing up for the talks on 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.