Iranian officials had reportedly responded to backchannel negotiations with a list of demands involving sanctions relief, regional security guarantees and compensation linked to recent military damage. The White House signaled the proposal would not be accepted in its current form.

The setback comes as instability around the Persian Gulf continues to disrupt global energy markets and shipping traffic. Concerns remain especially high around the Strait of Hormuz, where military activity and security alerts have forced several commercial operators to reroute or delay voyages in recent weeks.

Oil markets reacted cautiously following the latest diplomatic breakdown, with investors increasingly doubtful that a near-term political settlement can be reached.

U.S. allies in Europe and the Gulf have continued urging both sides to avoid further escalation, warning that prolonged conflict could damage international trade flows and place additional strain on already volatile fuel prices worldwide.

The Iran issue is also expected to overshadow part of Trump’s upcoming visit to China, where discussions with President Xi Jinping may include energy security and regional stability.

Although indirect communication channels between Washington and Tehran remain open, analysts say positions on both sides still appear far apart, reducing hopes for a rapid agreement.

Source: Reuters.