Vance: The ball is in "Iran's court." Iranian President: Willing to continue negotiations.

As negotiations in Islamabad collapse and the US blockade of the Strait of Hormuz takes effect, Washington has handed the next move back to Tehran.

According to media reports on Monday, US Vice President Vance said,whether US-Iranian peace talks can move forward depends on Iran's next steps. Previously, the US delegation led by Vance held marathon negotiations with Iranian representatives in Islamabad, Pakistan, but failed to reach an agreement. Meanwhile, the Trump administration announced a maritime blockade of Iranian ports, increasing economic pressure on Tehran.

According to Xinhua, a statement from the Iranian President's Office on the 13th said that Iranian President Pezeshkian, during a phone call with French President Macron, expressed that Iran is willing to continue negotiations with the US within the framework of international law and will abide by the ceasefire terms, adding that previous “excessive ambition” from the US side had hindered agreement.

These statements have rekindled hopes in the market for a diplomatic resolution to Middle East tensions. On Tuesday, international oil prices fell—US WTI crude oil May futures dropped over 2% to $96.91 a barrel, and international benchmark Brent crude June futures fell 1.88% to $97.49 a barrel. Investors are weighing the dual signals of the blockade escalation and room for continued negotiations.

Collapse of Negotiations: US says Iran "Didn't Go Far Enough"

Vance told the media that the US "put a lot on the table" in the Islamabad talks and drew clear red lines, but the Iranian team ultimately could not decide on key terms.

"They couldn’t reach an agreement, they must return to Tehran to seek approval from the Supreme Leader or others," Vance said. He noted that Iran had softened on two core issues, "they moved in our direction, which is why we see some positive signals. But they didn’t move far enough."

The US negotiation team consisted of Vance, President's Special Envoy Steve Witkoff, and Trump’s son-in-law Jared Kushner. Vance stated that given "the current team and timeline" were unable to reach an agreement, both sides decided to return to their respective capitals.

Iranian Foreign Minister Abbas Araghchi responded on platform X, saying Iran "participated in the negotiations in good faith," but just one step from reaching the 'Islamabad Memorandum of Understanding', they encountered "extremism, shifting goals, and the blockade." He wrote, "Good will be met by good, hostility by hostility."

Additionally, according to the Iranian President's Office statement on the 13th, President Pezeshkian in a call with French President Macron reiterated that Iran is willing to continue negotiations with the US within the framework of international law and will abide by ceasefire terms, pointing again to previous US “excessive ambition” as an obstacle to agreement.

In the call, Pezeshkian stated that diplomacy is Iran’s preferred method for resolving disputes: "Approaches based on threats, pressure, and military action will not solve the problem; instead, they only make it more complex and worsen issues caused by the US."

Nuclear Issue Red Lines: Removal of Enriched Uranium and Inspection Mechanisms

Vance made clear two US non-negotiable conditions, both rooted in the fundamental position that "Iran must never possess nuclear weapons."

First, the US demands the removal of Iran's enriched uranium. Vance pointed out that this uranium is currently "deep underground"—a result of US strikes on three Iranian nuclear facilities last June.

Second, the US demands Iran not possess uranium enrichment capabilities, "It’s precisely this capability that allowed them to get so close to nuclear weapons before the earlier strikes."

Vance stated that if Iran meets the US red lines on the nuclear issue, "it could be a very, very good deal for both countries."

Blockade of Hormuz: Pressure and Negotiation in Parallel

Shortly after the collapse of Islamabad negotiations, the Trump administration announced a maritime blockade against Iranian ports and coastal areas. Trump said Monday that this move is to force Tehran back to the negotiation table and criticized Iran for "extorting and blackmailing the world."

Vance characterized the blockade as "additional economic pressure" and indicated full reopening of the Strait of Hormuz is among the US’s explicit demands. He said the 14-day ceasefire agreement that began last week was partly premised on Tehran agreeing to reopen the strait, "but we have not yet seen a full reopening." "If they don't do so, it will fundamentally change our negotiations with them," Vance said.

According to Commonwealth Bank of Australia analyst Vivek Dhar, the blockade directly threatens Iran's oil exports through the Strait of Hormuz—last month, the channel saw Iranian oil flows of about 1.7 million barrels a day. "Hence, the blockade will further tighten the physical oil and product markets," he said.

Although the blockade should theoretically boost supply-tightening factors, Vance’s diplomatic signals weighed on prices. Market interpretation is that the US handing initiative to Iran, rather than declaring talks dead, keeps space open for a peaceful resolution. Vance repeatedly stressed in interviews, "I believe there is truly a big deal that can be reached," and said he will wait for Iran to "take the next step." He noted whether to schedule follow-up talks, "is best asked to the Iranians, because the ball is indeed in their court."

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