Efforts to end the Iran conflict were at an impasse on Tuesday with U.S. President Donald Trump unhappy with the latest proposal from Tehran, which he said had informed the U.S. it was in a "state of collapse" and figuring out its leadership situation.
Iran's most recent offer for resolving the two-month war would set aside discussion of its nuclear programme until the conflict was concluded and shipping disputes resolved.
But Trump wants nuclear issues dealt with from the outset, a U.S. official briefed on Trump's Monday meeting with his advisers said.
In a Truth Social post on Tuesday, Trump said: "Iran has just informed us that they are in a 'State of Collapse'. They want us to 'Open the Hormuz Strait,' as soon as possible, as they try to figure out their leadership situation (Which I believe they will be able to do!)."
It was unclear from his post how Iran might have communicated that message and there was no immediate response from Tehran to Trump's latest comments.
Earlier, an Iranian army spokesperson told state media the Islamic Republic did not consider the war over.
Iran has largely blocked all shipping apart from its own from the Gulf through the Strait of Hormuz, a chokepoint for global energy supplies, since the war began on 28 February. This month, the U.S. began blockading Iranian ships.
The Wall Street Journal reported, citing U.S. officials, that the president had instructed aides to prepare for an extended blockade of Iran's ports.
Hopes of reviving peace efforts in a conflict that has killed thousands, thrown energy markets into turmoil and disrupted global trade routes have receded since Trump last weekend scrapped a visit by his special envoy Steve Witkoff and son-in-law Jared Kushner to mediator Pakistan.
Iranian Foreign Minister Abbas Araghchi shuttled in and out of Islamabad twice during the weekend.
Since several senior Iranian political and military figures were killed in U.S.-Israeli strikes, Iran no longer has a single, undisputed clerical arbiter at the pinnacle of power, which may be hardening Tehran's negotiating stance.
The killing of Ayatollah Ali Khamenei on the first day of the war, and the elevation of his wounded son, Mojtaba, to replace him as supreme leader, has handed more power to hardline commanders of the Islamic Revolutionary Guard Corps (IRGC), Iranian officials and analysts say.
Senior Iranian officials, speaking on condition of anonymity, told Reuters the proposal carried by Araghchi to Islamabad over the weekend envisioned talks in stages.
A first step would require ending the war and providing guarantees the U.S. cannot restart it. Then negotiators would resolve the U.S. Navy's blockade of Iran's trade by sea and the fate of the Strait of Hormuz, which Iran aims to reopen under its control.
Only then would talks look at other issues, including the longstanding dispute over Iran's nuclear programme, with Iran seeking U.S. acknowledgment of its right to enrich uranium.
That would bear echoes of Iran's 2015 nuclear deal with the United States and other powers, which had sharply curtailed Tehran's nuclear programme.
Trump unilaterally withdrew from that accord in his first term. Now he faces domestic pressure to end a war for which he has given the U.S. public shifting rationales.
Trump's approval rating fell to the lowest level of his current term, as Americans increasingly soured on his handling of the cost of living and the unpopular war, according to a Reuters/Ipsos poll. The poll showed 34% of Americans approve of Trump's performance, down from 36% in the prior survey.
In the latest sign of strains between Trump and European allies, he said in a social media post that German Chancellor Friedrich Merz "doesn’t know what he’s talking about" regarding Iran.
Merz said on Monday that Iran's leadership was humiliating the U.S. and that he did not see what exit strategy the Trump administration was pursuing.
But Britain's King Charles told the U.S. Congress on Tuesday that despite uncertainty and conflict in Europe and the Middle East, the UK and the U.S., "whatever our differences," will always be staunch allies united in defending democracy. He spoke at a time of deep divisions between the two longtime partners over the war with Iran.
With the warring sides still seemingly far apart, oil prices resumed their upward march, with Brent crude rising nearly 3% to around $111 a barrel.
The World Bank forecast energy prices would surge by 24% in 2026 to their highest level since Russia’s full-scale invasion of Ukraine four years ago, if the most acute disruptions caused by the Iran war end in May.
The United Arab Emirates said it was quitting OPEC and OPEC+, exposing discord among Gulf nations over Iran.
At least six tankers loaded with Iranian oil have been forced back to Iran by the U.S. blockade in recent days, ship-tracking data showed, underscoring the war's impact on traffic.
Iranian government spokesperson Fatemeh Mohajerani told state media that Tehran was using northern, eastern and western trade corridors to neutralise the blockade's effects.
Between 125 and 140 ships usually crossed in and out of the Strait of Hormuz daily before the war, but only seven have done so in the past day, according to Kpler ship-tracking data and satellite analysis from SynMax. None of them were carrying oil bound for the global market.
Also on Tuesday, the U.S. said it was imposing sanctions on 35 entities and individuals for their role in Iran's shadow banking system.
The Treasury Department's Office of Foreign Assets Control also warned any firm making "toll" payments to the Iranian government or the Islamic Revolutionary Guard Corps for passage through the Strait of Hormuz would face sanctions.
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Overnight U.S. strikes caused blackouts in southwestern Iran and hit the northwestern city of Tabriz for the first time. Separately, a U.S. soldier died in northern Iraq during a controlled detonation of an unexploded Iranian drone.
President Donald Trump said the United States will target Iran’s heavily fortified Pickaxe Mountain site “pretty soon” as he meets with Lebanese president Michel Aoun. Meanwhile, U.S. forces carried out a 10th consecutive night of strikes on Iran while Tehran continues to target Gulf countries.
Oil prices fell on Tuesday as markets balanced reports of renewed diplomatic efforts between the United States and Iran with continued military escalation and fresh threats to global energy supplies.
Overnight U.S. strikes caused blackouts in southwestern Iran and hit the northwestern city of Tabriz for the first time. Separately, a U.S. soldier died in northern Iraq during a controlled detonation of an unexploded Iranian drone.
The United States launched fresh strikes against Iran after two U.S. service members were killed in Jordan. U.S. President Donald Trump paid tribute to the fallen troops as Iran warned of further escalation.
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