A second attempt to broker direct negotiations between the United States and Iran broke down in Islamabad on Saturday, leaving the fragile ceasefire in place but prospects for a lasting peace deal deeply uncertain. President Donald Trump announced he had cancelled the planned trip of special envoy Steve Witkoff and his son-in-law Jared Kushner to Pakistan, citing Iran’s internal divisions and what he described as an inadequate proposal from Tehran.

“Too much time wasted on traveling, too much work,” Trump wrote on Truth Social. “Besides which, there is tremendous infighting and confusion within their ‘leadership.’ Nobody knows who is in charge, including them.” He added that Iran had submitted a “much better” paper within ten minutes of him cancelling the trip, but maintained that the earlier proposal “should have been better.” Trump said negotiations would now proceed by telephone if Iran wished to talk.

On the Iranian side, Foreign Minister Abbas Araghchi — who spent roughly twenty hours in Islamabad meeting Pakistani mediators, including Prime Minister Shehbaz Sharif — left the Pakistani capital for Oman before the expected arrival of any American delegation. Iranian state media had repeatedly said that Araghchi would not hold direct talks with US officials. He described his visit as “very fruitful” and said on social media that he was waiting “to see if the US is truly serious about diplomacy.”

In a telephone call with Prime Minister Sharif, Iranian President Masoud Pezeshkian was more direct. He stated that Tehran would not enter “forced negotiations” while facing US military and economic pressure. Washington, he said, must first lift “operational obstacles, including the blockade,” before any new round of talks could proceed.

The US naval blockade has now been in effect since April 13 and has seen growing confrontations in the strait. As of Saturday, the US Navy had redirected 37 ships attempting to approach Iranian ports and had seized three vessels that refused to comply. The Treasury Department’s “Economic Fury” campaign imposed new sanctions on 19 tankers on Friday alone, including the Sevan — sanctioned one day and intercepted the next in the Arabian Sea.

Iran’s military command warned that if the US continued the blockade, its “powerful armed forces” would respond. Senator Lindsey Graham, a close Trump ally, used the breakdown of talks to call for US forces to establish “firm control over the Strait of Hormuz,” suggesting military engagement may be required in the short term.

Oil markets reflected the uncertainty. Brent crude has traded above $105 per barrel in recent days, compared with roughly $70 before the conflict began in late February. The International Energy Agency’s April report described global oil supply as having fallen by 10.1 million barrels per day in March — the largest disruption in the history of world energy markets. The IEA warned that even if the Strait reopens soon, flows could take months to return to pre-conflict levels.

For Bangladesh, the collapse of the Islamabad talks means the Hormuz blockade — and the energy crisis it has triggered — extends further into an already fragile economic moment. Bangladesh relies on imports for approximately 95% of its energy needs and has a fifteen-year LNG supply agreement with QatarEnergy that began in January 2026. That contract has been rendered effectively inoperative after QatarEnergy declared force majeure following Iranian attacks on Qatari energy infrastructure in early March.

The country’s gas supply to the power sector has fallen from 870 million cubic feet per day to 820 mmcfd, worsening loadshedding across the country. Industrial production has been curtailed, agricultural fertiliser supply has been disrupted at a critical point in the Boro rice season, and the government faces a widening import bill at a time of limited fiscal headroom. Analysts at SolAbility rank Bangladesh as the fifth most severely affected economy in the world, with a projected GDP loss of 4.96% under the sustained Hormuz-closure scenario — worse than most Asian peers.

Pakistan’s mediating role has kept the diplomatic channel alive even after Saturday’s setback; Prime Minister Sharif spoke with both Araghchi and President Pezeshkian on Saturday evening. Whether a third round of talks can be arranged — and whether the Strait of Hormuz can be reopened before Bangladesh’s energy situation deteriorates further — remains the central question for the days ahead.