Recent developments suggest a significant shift in Iran's diplomatic strategy, moving away from Pakistan-mediated talks with the U.S. for the time being.
The key trigger appears to be a change in negotiation dynamics. A report from journalist Anas Mallick indicated that Iran's foreign minister will not return to Pakistan immediately after his visit to Russia. This directly contradicts earlier statements and suggests Tehran is deprioritizing the Islamabad channel, at least for now.
So, what caused this sudden change? There seem to be three main factors. First, the U.S. escalated tensions by announcing a naval blockade of Iranian ports after the first round of talks in Islamabad failed to produce a breakthrough. Second, in response to the Iranian foreign minister's departure from Pakistan, President Trump canceled the dispatch of U.S. envoys, which removed an immediate incentive for Iran to return. Third, Iran's foreign minister received a high-level welcome in Moscow, including a meeting with President Putin. This provided Tehran with an alternative, and potentially more influential, venue for negotiations.
In this context, Iran has put forward a new proposal: it will reopen the Strait of Hormuz if the U.S. lifts the blockade and agrees to defer nuclear issues. This type of high-stakes bargain is likely better suited for a great-power forum like Moscow, where Iran feels it has more leverage, rather than the mediated setting in Islamabad.
This diplomatic uncertainty is keeping markets on edge. The risk premium in oil and shipping remains elevated. Oil prices, which have already risen over 50% since the conflict began, are likely to stay high as traders wait for a clear signal of de-escalation. The shift in negotiation tactics means that any resolution will now likely come through Moscow or Muscat, not Islamabad, extending the period of uncertainty.
- Risk Premium: The extra return an investor expects to receive for holding a risky asset compared to a risk-free one. In this context, it refers to the higher price of oil due to the geopolitical risk of conflict disrupting supply.
- Naval Blockade: The act of using warships to prevent ships from entering or leaving a country's ports, a serious act of military pressure.