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Donald Trump blamed Iran’s refusal to abandon its nuclear ambitions for the breakdown of talks that had raised hopes of a permanent end to the conflict.
Negotiations in Islamabad, involving US officials including JD Vance, ended without agreement despite Pakistan's mediation efforts.
US Central Command said the blockade will be enforced against vessels entering or leaving Iranian ports on the Arabian Gulf and the Gulf of Oman.
However, it clarified that ships transiting the Strait of Hormuz to non-Iranian destinations will not be impeded.
Global oil prices rose by around eight per cent following the announcement, with both WTI and Brent crude trading above $100 per barrel.
Iranian officials, including parliament speaker Mohammad Bagher Ghalibaf, said Tehran would not give in to US pressure, while navy chief Shahram Irani dismissed the blockade threat as “ridiculous.”
Foreign Minister Abbas Araghchi blamed US positions, including what he described as “maximalism” and shifting demands, for the failure to reach a deal.
The development threatens a fragile two-week ceasefire between the United States and Iran, with analysts warning that a maritime blockade could reignite broader conflict.
Pakistan, the mediator, has urged both sides to maintain dialogue and uphold the truce.
The escalation comes amid ongoing tensions in Lebanon, where clashes between Hezbollah and Israeli forces persist despite ceasefire efforts.