The United States has voiced optimism regarding potential peace negotiations with Iran, set to take place in Pakistan. Meanwhile, a high-ranking Iranian official indicated that Iran is contemplating participation. Despite this, significant challenges and uncertainties loom as the ceasefire’s expiration draws near.

President Donald Trump is keen on securing an agreement that stabilizes oil prices and shields the stock market from potential shocks. He remains firm, however, in his stance that Iran must not gain the capability to develop nuclear weapons.

During an appearance on Fox News on Tuesday, White House press secretary Karoline Leavitt mentioned that the U.S. is “on the brink” of reaching a deal with Iran, suggesting promising progress in the discussions.

Iran, on the other hand, aims to capitalize on its strategic control of the Strait of Hormuz to negotiate a deal. Their objective is to avoid a resurgence of conflict and alleviate sanctions while maintaining their nuclear program ambitions.

A recent statement from an Iranian official indicated that Iran is “positively reviewing” its participation in the talks. This marks a notable shift from previous declarations that dismissed the possibility of attending and promised retaliation against U.S. actions deemed aggressive.

Nevertheless, the official emphasized that no final decision has been made. Iranian Foreign Minister Abbas Araghchi pointed out that “continued violations of the ceasefire” by the U.S. present a significant barrier to advancing the diplomatic dialogue.

A Pakistani source involved in the discussions said there was momentum for talks to recommence on Wednesday and Trump could attend in person, or virtually, if a deal were to be signed.

“Things are moving forward and the talks are on track for tomorrow,” the source said on Tuesday on the condition of anonymity.

Araghchi told his Pakistani counterpart, Ishaq Dar, in a telephone call that Iran, while taking all aspects of the matter into account, had yet to decide how to proceed further.

The two-week ceasefire in a conflict that has killed thousands and roiled the global economy, particularly energy markets, is set to expire this week.

Oil prices down amid optimism over talks

Oil prices fell and stocks bounced back in early trading in Asia on Tuesday on expectations that talks would resume this week, after earlier meetings in Islamabad broke down without an agreement.

Oil prices had dipped in Monday trading on doubts over the talks.

But tensions remained high, with Iran’s foreign ministry condemning the US on Tuesday for what it called an attack on the Iranian commercial vessel Touska over the weekend, demanding the immediate release of the vessel, its crew and their families.

Trump said on social media that he believed his administration’s nuclear deal with Iran would be better than a 2015 international agreement reached after years of negotiations under then-president Barack Obama.

Trump withdrew from that agreement, which had been vehemently opposed by congressional Republicans and Israeli Prime Minister Benjamin Netanyahu, in 2018, during his first term as president.

It was unclear what kind of agreement could be reached in just a few days of talks, but Trump predicted a quick result.

“I am under no pressure whatsoever, although, it will all happen, relatively quickly!” Trump said in a Truth Social post.

Pakistan has been gearing up to host the talks despite uncertainty over whether they would go ahead.

Nearly 20,000 security personnel have been deployed across Islamabad, a government official and a security official said.

Ongoing blockade

The ceasefire had appeared in jeopardy after the US said it had seized an Iranian cargo ship that tried to run its blockade, and Iran vowed to retaliate.

A Pakistani security source said Pakistani mediator Field Marshal Asim Munir had told Trump the blockade was an obstacle to talks, and that Trump had promised to consider ending it.

The US was hoping to start negotiations in Pakistan shortly before the ceasefire expires.

However, Iranian President Masoud Pezeshkian said that “unconstructive and contradictory signals from American officials carry a bitter message; they seek Iran’s surrender.”

“Iranians do not submit to force,” he added on X.

Ceasefire set to expire

Trump announced the two-week ceasefire with Iran on 7 April and has not specified when precisely it ends.

A Pakistani source involved in the talks said it would expire at 10am AEST on Thursday, which would be 3.30am Thursday in Iran.

The US has maintained its blockade of Iranian ports, while Iran lifted and then reimposed its own blockade of the Strait of Hormuz, which typically handles roughly one-fifth of the world’s oil and liquefied natural gas supply.

Oil prices rose around 5 per cent as traders remained fearful that the ceasefire would collapse. Traffic through the Strait of Hormuz was at a virtual standstill with just three crossings in the space of 12 hours, according to shipping data.

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