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US-Iran peace hopes fade as Trump scraps talks

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Hopes of a diplomatic breakthrough in the U.S.-Israeli war with Iran receded as a new ‌week began, with talks aimed at ending the two-month conflict at a standstill and both Tehran and Washington showing little willingness to soften their terms.

Iranian Foreign Minister Abbas Araqchi left mediator Pakistan empty-handed at the weekend, and U.S. President Donald Trump canceled a planned visit ​to Islamabad by his envoys Steve Witkoff and Jared Kushner, dealing back-to-back blows to peace prospects, Reuters reported.

The deadlock ​leaves the world’s biggest economy and a major oil power locked in a confrontation that ⁠has already pushed energy prices to multi-year highs, stoked inflation and darkened global growth prospects.

Iranian President Masoud Pezeshkian told ​Pakistani Prime Minister Shehbaz Sharif by phone that Tehran would not enter “imposed negotiations” under threats or blockade, according to a ​statement from the Iranian government.

Pezeshkian said the United States should first remove “operational obstacles,” including its blockade on Iranian ports, before negotiators can lay any groundwork to resolve the conflict.

Araqchi described his visit to Pakistan as “very fruitful.” An Iranian diplomatic source in Islamabad said Tehran would ​not accept “maximalist demands” from the United States.

Trump told reporters in Florida that he scrapped the envoys’ visit because the talks ​involved too much travel and expense to consider an inadequate offer from the Iranians. After the diplomatic trip was called off, Iran “offered ‌a lot, ⁠but not enough,” Trump said.

On Truth Social, he wrote that there was “tremendous infighting and confusion” within Iran’s leadership.

“Nobody knows who is in charge, including them,” he posted. “Also, we have all the cards, they have none! If they want to talk, all they have to do is call!!!”

Pezeshkian said on Thursday that there were “no hardliners or moderates” in Tehran and ​that the country stood united ​behind its supreme leader. ⁠Iran’s top negotiator Mohammad Baqer Qalibaf and Araqchi echoed the message in recent days.

Adding to regional strains, Israeli Prime Minister Benjamin Netanyahu ordered his troops to attack Hezbollah targets in Lebanon, ​his office said, further testing a three-week ceasefire.

Tehran has largely closed the Strait of ​Hormuz, which normally ⁠carries one-fifth of global oil and liquefied natural gas shipments, while Washington blocks Iran’s oil exports.

White House press secretary Karoline Leavitt earlier said the U.S. had seen some progress from the Iranian side and that Vice President JD Vance was ready ⁠to travel ​to Pakistan. Vance led an unsuccessful first round of talks in ​Islamabad this month.

The U.S.-Iran conflict, in which a ceasefire is in force, began with U.S.-Israeli airstrikes on Iran on February 28. Iran has since struck ​Israel, U.S. bases and Gulf states.

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Pakistan, Saudi Arabia and Türkiye strengthen new Mecca Defence Alliance

The three countries, however, have stressed that the agreement is defensive and not aimed at any particular state.

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Pakistan, Saudi Arabia and Türkiye have taken another step towards putting their new mutual defence agreement into operation, holding the first meeting of a joint committee established under the pact.

The three countries formally named the arrangement the Mecca Defence Alliance following high-level talks in Istanbul on Monday.

Turkish Foreign Minister Hakan Fidan said a permanent secretariat would be established in Riyadh, with the first secretary-general expected to come from Pakistan.

The alliance was created after the three countries signed the Mecca Joint Defence Agreement on August 7. Under the pact, an attack on one member is to be treated as an attack on all three.

Fidan said the alliance was based on respect for national sovereignty, territorial integrity and non-interference in internal affairs, while stressing that it remained open to other countries in the region.

Monday’s meeting brought together senior political and military officials from all three nations. Talks focused on military interoperability, joint exercises, defence-industry cooperation, joint production and research, and counterterrorism coordination.

However, questions remain over how the alliance would operate during an actual military crisis.

The Istanbul meeting comes as regional tensions have risen sharply, with the United States and Iran exchanging strikes on Monday after a month-long pause.

Washington said its forces struck two Islamic Revolutionary Guard Corps rocket launchers on Iran’s Larak Island in the Strait of Hormuz. Iran later claimed attacks on US military positions in Jordan and the UAE, although both countries denied the bases had been hit.

The developments present a delicate challenge for Pakistan, which maintains close security ties with Saudi Arabia while also seeking to mediate between Iran and the United States.

Field Marshal Asim Munir travelled to Tehran on August 24 for talks with senior Iranian officials as Pakistan sought to revive diplomatic efforts to end the conflict and address the continuing closure of the Strait of Hormuz.

Analysts warn Pakistan’s position could become more difficult if the trilateral alliance is seen as being directed against Iran.

The three countries, however, have stressed that the agreement is defensive and not aimed at any particular state.

The alliance could eventually expand beyond its three founding members, with Pakistan and Türkiye indicating that other countries could join.

Egypt is considered one of the leading possibilities. Cairo has participated in earlier discussions with Pakistan, Saudi Arabia and Türkiye on regional stability, while Turkish President Recep Tayyip Erdogan has said Egyptian membership is possible. Egypt is reportedly examining the legal and constitutional implications before making a decision.

Bangladesh has also publicly expressed interest.

In the Gulf, Qatar, Kuwait and Bahrain have been identified as potential candidates because of their close ties with the three founding members and interest in diversifying their security partnerships.

Any expansion, however, would require agreement among Pakistan, Saudi Arabia and Türkiye over the security obligations involved in admitting new members.

The Istanbul meeting marks an important first step in turning the Mecca Defence Alliance from a political agreement into a more structured regional security partnership.

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Trump says Iran’s Kharg is being ‘blown to smithereens’, but gives no details

Attacking Kharg, which handled 90% ​of Iran’s oil exports before the war launched by U.S. and Israeli attacks on February 28, would severely disrupt its energy trade and put huge pressure on its ​economy.

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Iran’s energy hub of Kharg Island is being blown to smithereens, U.S. President Donald Trump ​said on Sunday in a one-line social media post accompanied by an AI-generated video clip.

There was no other evidence that the Iranian energy hub was under ‌attack. The White House and the U.S. Defense Department did not immediately respond to Reuters requests for comment outside regular business hours, Reuters reported.

There was no immediate response to Trump’s post on Iranian media.

“Kharg Island being blown to smithereens!!! President DJT,” Trump said on social media, but gave no further details.

Reuters confirmed that an accompanying video clip showing dramatic explosions was most likely synthetically-generated, using software that detects AI-manipulated imagery.

Attacking Kharg, which handled 90% ​of Iran’s oil exports before the war launched by U.S. and Israeli attacks on February 28, would severely disrupt its energy trade and put huge pressure on its ​economy.

Iran responded to an earlier U.S. attack on rocket launchers on its island of Larak, about 660 km (410 miles) east of Kharg, with ⁠an assault on two U.S. bases in Jordan, Iranian media said.

The return to hostilities followed weeks in which the Trump administration has stepped up efforts to punish Tehran and its ​business partners with costly economic sanctions, shifting away from military options.

U.S. Treasury Secretary Scott Bessent told Reuters on Sunday new secondary sanctions were likely to be unveiled weekly in the effort to pressure ​Iran, with an initial focus on banks.

“We’re starting with the banks, and we’re telling the banks it’s not okay to have Iranian money and to aid the regime,” Bessent said in an interview.

After imposing penalties on the United Arab Emirates branches of Egypt’s Banque Misr on Friday over alleged financial links to Iran, Bessent said the next step may be cutting off an institution entirely from the dollar-based financial system.

“You’re ​going to see a lot more of these every week,” Bessent told Reuters, ahead of a meeting of Group of 20 finance leaders.

FIRST KNOWN MILITARY ATTACKS IN WEEKS

In describing the first ​known U.S. military strikes since late July, a U.S. official said forces attacked two Iranian launchers on Larak Island.

The small island in the Strait of Hormuz near the strategic port of Bandar Abbas overlooks shipping ‌lanes at ⁠the mouth of the Gulf, giving it a key role in tension over Iran, maritime security and global energy supplies.

“Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz,” the source added.

In retaliation, Iran launched ballistic missiles at Jordan, targeting two U.S. bases. Jordan’s armed forces had intercepted eight missiles that entered its airspace, state television said.

Iran’s Revolutionary Guards said the attack killed and wounded several soldiers and citizens and vowed a “response and punishment” from Tehran, according to Iranian state media.

In a statement, the U.S. ​Central Command said it took “limited, precise” action against ​minelaying forces of Iran’s Revolutionary Guards that ⁠posed an “imminent threat” in the Strait of Hormuz. It gave no details.

After the U.S. strikes, Iran attacked U.S. forces station in Jordan, a Fox News reporter said on Sunday, citing a U.S. source. Nearly all incoming missiles “have been intercepted at this point,” the reporter said on ​X, flagging a lack of significant impact.

Amid threats to shipping, the number of visible commodity vessels transiting the Strait of Hormuz dropped to ​five a day over the ⁠weekend, shipping data showed.

The actual number could be higher as some vessels have switched off automatic identification systems to evade attacks.

Last week, U.S. President Donald Trump said all mines had been detonated or removed from the international waters of the strait and Iran had been warned that any vessel placing new mines would be destroyed.

While Trump has repeatedly said the Strait of Hormuz is open, Iran’s ⁠Revolutionary Guards’ navy ​had called those statements “an obvious lie”, reiterating that it remained closed to ships without Iranian permission.

The waterway carried ​nearly a fifth of global crude oil and liquefied natural gas shipments before it was blockaded in the six-month-old Iran war.

Iran is the third largest producer in the Organization of the Petroleum Exporting Countries.

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War weighs on Iran’s economy as US intensifies sanctions

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Iranian leaders are acknowledging the economic toll of war with the U.S., with the supreme leader urging the government to ​address the hardship and the president saying foreign trade has shrunk by a third due to the American sanctions and blockade.

Yet Tehran signalled no retreat on Saturday, ‌vowing to withstand U.S. pressure, pursue diplomacy and maintain what it said was control over the Strait of Hormuz, the strategic waterway giving Iran leverage through its ability to disrupt global energy markets, Reuters reported.

The government said in a statement on state media that addressing economic pressures caused by sanctions and war was a central focus, including curbing inflation, managing markets, creating jobs, directing investment towards domestic production and gradually reducing dependence on the dollar.

Six months after the U.S. and ​Israel launched the war, negotiations are at an impasse and President Donald Trump’s administration has stepped up efforts to punish Iran financially with what it has billed as an “economic D-Day”.

SANCTIONS ​COMPOUND TOLL ON IRAN’S ECONOMY

Washington has warned countries to cut business ties with Iran or face secondary sanctions, though the Treasury Department stopped short of imposing ⁠penalties against major Iranian trade partners such as China and India, which could have repercussions for the U.S. and global economies.

The Treasury imposed sanctions on Egypt’s Banque Misr for doing business with Tehran, proposing ​a rule that would cut off the bank’s branches in the United Arab Emirates from dollar transactions.

Egypt’s central bank said it and the foreign ministry were in contact with U.S. officials concerning the matter, ​adding the measure was limited to Banque Misr UAE’s U.S. dollar transactions with correspondent banks only.

Banque Misr said on Saturday it was reviewing the U.S. Treasury notice, adding that its branch in the UAE continued to provide banking services to its customers.

The U.S. has also issued sanctions targeting an entity based in Hong Kong and a person linked to Iran’s Bank Melli, according to a notice on the Treasury website.

The sanctions drive compounds the toll of ​the war on Iran’s economy, where annual inflation hit 66% last month.

Supreme Leader Ayatollah Mojtaba Khamenei — who has not been seen publicly since he was injured in the initial February 28 attack that killed his ​father and former Supreme Leader, Ayatollah Ali Khamenei — called on the government to tackle the economic hardship.

“There is the need to seriously address the chain of economic and livelihood challenges, such as inflation, unemployment, management of prices ‌and the ⁠market for goods and services,” he said, according to a written statement attributed to Khamenei.

President Masoud Pezeshkian told state media that Iranian exports and imports had slumped nearly 35% because of U.S. sanctions and a naval blockade of Iranian ports.

But he said Iran was able to sell about 90 million barrels of oil during the short-lived memorandum of understanding that the U.S. and Iran signed in June, when Washington permitted Iranian oil sales.

Later on Saturday, Pezeshkian called on state TV for a revival of the interim deal, which was signed on June 17 but quickly unravelled amid disagreements over what had been agreed, especially ​on the status of the Strait of Hormuz.

“We ​can solve our problems and gain our ⁠privileges with the memorandum of understanding,” he said of a document that had offered Iran, among other things, immediate relief from U.S. sanctions and the release of its frozen assets.

IRAN VOWS TO PURSUE DIPLOMACY AND DEFENCE

With the U.S. focused on its economic pressure campaign, others have sought to revive diplomatic ​efforts to end the war.

Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani met with Iranian leaders in Tehran on Thursday. He said he ​had stressed during the meeting ⁠the importance of returning to the pre-war status of open shipping through the Strait of Hormuz.

Iranian Foreign Minister Abbas Araqchi on Friday described the talks with Al Thani as “creative”.

In Saturday’s statement, Iran said diplomacy and defence were “two complementary, coordinated and inseparable wings” for protecting the country’s national interests, security and territorial integrity. It said it would pursue both tracks in a balanced manner.

Qatar, a U.S. ally and Gulf neighbour to Iran, ⁠and Pakistan helped ​broker the June memorandum of understanding.

Before the war, the Strait of Hormuz carried 20% of the world’s oil and LNG. ​U.S. military commanders say American forces have cleared sea mines from the strait that had been laid months ago by Iran’s Islamic Revolutionary Guard Corps.

Trump has repeatedly said the strait is open, but the Revolutionary Guards’ navy said in a statement ​that such claims “are an obvious lie”, reiterating that the waterway remained closed to ships without Iranian permission.

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