Could the US-Iran war become a protracted ‘frozen’ conflict?

US-Iran peace talks in Pakistan have collapsed, raising concerns about a prolonged energy shock and rising oil prices. US Vice President JD Vance blamed Iran's nuclear program for the failure, while Iranian sources cited "excessive" demands from Washington. The breakdown in negotiations is expected to cause oil prices to rise to around $98 a barrel when trading resumes, with analysts predicting prices could remain above $100 a barrel in the second quarter. The conflict began on February 28th with US and Israeli airstrikes on Tehran. Former President Trump stated that the US would blockade the Strait of Hormuz, which Iran claims to control, following the failed talks.

The International Monetary Fund (IMF) lowered its global economic growth forecast for 2026 from 3.3% to 3.1% due to escalating tensions between the US and Iran, beginning in late February 2026. Iran's subsequent closure of the Strait of Hormuz and attacks on regional energy infrastructure have driven up oil and gas prices, contributing to a higher global inflation forecast of 4.4%. The IMF anticipates the largest GDP growth declines in countries closest to the conflict and those reliant on energy imports. The Middle East and North Africa's growth forecast was cut by 2.8 points to 1.1%, while Iran's outlook experienced a significant revision, forecasting a 6.1% contraction. The IMF highlights the policy trade-offs between fighting inflation, preserving growth, and supporting those affected by the rising cost of living.

Asia-Pacific airlines are facing jet fuel shortages and rising prices, leading to flight cancellations. The situation is exacerbated by the United States controlling oil shipments through the Strait of Hormuz after failed peace talks with Iran, effectively limiting global oil supply. Jet fuel prices have approximately doubled since before the conflict, reaching nearly US$198 per barrel in early April. Airlines in the region, particularly those in countries lacking strategic energy reserves, are cutting capacity to cope with the increased costs and limited supplies. Philippine Airlines, for example, has suspended five routes and is working to minimize disruption.

High-level talks between the US and Iran in Islamabad, aimed at resolving decades of hostility, concluded without a resolution after 21 hours. The discussions, held during a pause in ongoing conflict, addressed complex issues including Iran's nuclear program and control of the Strait of Hormuz. Despite failing to reach an agreement, the meeting was significant as it broke a longstanding political taboo. The immediate concern is the future of the two-week ceasefire, which was implemented following threats from the US. The talks sought to address deep distrust and prevent further escalation of the conflict. The next steps for both nations remain uncertain.

US and Iranian negotiating teams may return to Islamabad for further talks after a previous round, lasting 21 hours, ended without a deal. Despite a lack of mutual trust, analysts suggest a limited settlement is possible as both sides cautiously approach de-escalation. However, they warn that a strategic miscalculation could trigger renewed conflict. Iran's lead negotiator stated that Washington failed to gain Tehran's trust, while the US Vice-President cited Tehran's lack of commitment to halt nuclear weapons development as a key obstacle. The talks aim to address ongoing tensions between the two nations, but success hinges on pragmatic adjustments to expectations.

British Chancellor Rachel Reeves criticized Donald Trump's war on Iran during an event in Washington, stating it was a "mistake" that has destabilized the global economy and negatively impacted living standards. Speaking ahead of IMF meetings, Reeves expressed frustration with the lack of a clear US exit plan and argued that the conflict has worsened the situation, including the closure of the Strait of Hormuz. She advocated for the urgent reopening of the waterway to calm global energy prices. Reeves emphasized that diplomacy, rather than conflict, is the best way to prevent Iran from developing nuclear weapons, highlighting that diplomatic channels were previously open. She stated her goal at the IMF meetings was to convey the message that the conflict is harming living standards worldwide and requires urgent de-escalation.

On day 47 of the US-Iran conflict in April 2026, despite a US naval blockade, President Trump indicated potential second-round talks with Iran, possibly in Pakistan. The IMF warned of a global recession if the conflict escalates. The Red Cross delivered humanitarian aid to Iran, marking the first such delivery since the war began. The US Treasury will end a waiver allowing the sale of Iranian oil. Rare US-brokered talks occurred between Lebanese and Israeli ambassadors in Washington, DC, addressing ceasefire demands and Hezbollah disarmament. Negotiations are stalled over uranium enrichment moratorium length, with the US seeking 20 years and Iran proposing five. Iran estimates $270 billion in war losses and plans to seek reparations.

On day 45 of the US-Iran conflict, tensions escalated after President Trump announced a naval blockade of the Strait of Hormuz, a critical passage for global oil supply, following failed peace talks in Islamabad. The US military stated the blockade of Iranian ports would begin Monday at 14:00 GMT. Iran's Revolutionary Guards warned that any military vessels approaching the strait would be considered a breach of ceasefire and met with force. Iranian officials condemned the blockade as "ridiculous" and accused the US of "maximalism." The blockade announcement has already pushed oil prices above $100 a barrel and raised concerns about global supply disruptions, while Israeli attacks on Lebanon continue.

On day 46 of the US-Iran conflict in April 2026, a US blockade of Iranian ports is in effect, prompting accusations of "piracy" and protests in Tehran. Despite the blockade, President Trump suggests a deal with Iran is still possible. Diplomatic efforts to revive US-Iran talks are intensifying, with Pakistan offering to host negotiations. Russia has withdrawn nuclear staff from Iran's power plant. Qatar is urging mediation, and the UK wants Lebanon included in ceasefire talks. The UN warns of growing shipping disruptions and global economic fragility due to instability in the Strait of Hormuz, with approximately 20,000 vessels stranded.

The United States and Iran are preparing for peace talks in Islamabad, Pakistan on April 10, 2026, mediated by Pakistan, despite modest expectations for a lasting agreement. The ceasefire, based on Iran's 10-point proposal, reflects Iranian terms more than American, including continued Iranian control of the Strait of Hormuz. The US appears to have tacitly acknowledged Iran's authority over the strait and its upper hand in setting negotiation terms. Iran's demands include recognition of its control over the strait, acceptance of uranium enrichment, the lifting of all US and UN sanctions, and a US military withdrawal from the region. Even if the talks fail to produce a deal, the ceasefire may prevent a return to full-scale war.

US Vice President JD Vance has been dispatched to Islamabad to negotiate a peace deal with Iran, marking his first major assignment amid ongoing US-Israeli military action. Vance's task is to solidify a ceasefire and negotiate the opening of the Strait of Hormuz. However, Iran, emboldened by its control of the strait, demands the release of blocked assets as a precondition for negotiations. The success of these talks, the highest-level meeting since 1979, could significantly impact Vance's political future, particularly his potential 2028 presidential run. The negotiations face uncertainty due to recent Israeli strikes and disagreements over Lebanon's inclusion in the ceasefire, setting the stage for potentially difficult and protracted discussions.

High-level talks between the U.S. and Iran, involving Vice President JD Vance and Iranian Parliament Speaker Mohammad Ghalibaf, aim to bridge significant distrust and disagreements. These indirect negotiations, primarily mediated by Oman, follow previous unsuccessful efforts to revive the 2015 nuclear deal after the U.S. withdrew. Iran prefers Vance due to his formal position and perceived skepticism towards military action, contrasting with previous U.S. envoys seen as too close to Israel. The talks face challenges including deep-seated distrust, especially after recent military escalations, and differing negotiating styles. Direct conversations have occurred, but Iranian hardliners limit negotiators, seeking to avoid hostile exchanges.

Following a US-Iran ceasefire in April 2026, Israel launched air strikes on Lebanon, resulting in over 250 deaths and prompting Iran to reimpose its Strait of Hormuz blockade. The dispute centers on whether the ceasefire included Israel's actions in Lebanon, with Pakistan claiming it did and Israel denying it. The US sided with Israel, calling the violence a separate issue. The ceasefire, brokered without Israel's active involvement, has led to political pressure on Israeli Prime Minister Netanyahu as none of Israel's war aims were achieved. Negotiations based on Iran's 10-point peace plan are set to begin, potentially allowing Iran to retain its nuclear stock and benefit financially.

Following heightened tensions and threats, the US and Iran agreed to a two-week truce, contingent on the reopening of the Strait of Hormuz, a vital waterway for global oil and gas shipments. Negotiations are scheduled to begin in Islamabad, Pakistan. However, Gulf states are apprehensive that the US, seeking a swift resolution, might concede some control of the Strait of Hormuz to Iran in exchange for a temporary ceasefire. This concern stems from Iran's demand to maintain control over the Strait and coordinate maritime passage with its military. The Gulf Cooperation Council (GCC) countries have expressed cautious optimism, emphasizing the need for a permanent and lasting solution that ensures the Strait's free passage.