On Friday, following a 10 day ceasefire agreement between Israel and Lebanon, Iran formally declared the Strait of Hormuz open, citing the regional de-escalation as justification for lifting restrictions on maritime traffic. However, President Trump posted to Truth Social almost immediately, stating that the US naval blockade would remain in effect. In response, Iranian officials announced the strait was once again closed. Enforcement operations resumed shortly after with reports of vessels being fired at.Then, on Sunday, the US seized an Iranian-flagged cargo vessel in the Gulf of Oman as part of its naval blockade.
Markets reacted negatively to the developments, with crude oil up about 5% and the major indices down around 0.3% on Monday morning.
A new US delegation including Special Envoy Steve Witkoff and JD Vance are heading to Islamabad for a second round of talks, with the ceasefire set to expire Wednesday. However, Iranian officials have stated they do not plan on partaking in negotiations.
The state of Iran’s nuclear program remains a key focal point in discussions. The US has demanded Iran completely abandon its uranium enrichment program and relinquish its stockpile of highly enriched uranium, terms Tehran has so far rejected.
Sources: Bloomberg, CNBC
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