US-Iran talks extend into late night as Strait of Hormuz dispute escalates

US and Iranian negotiators pushed talks past midnight in Switzerland Sunday as dueling claims over the Strait of Hormuz threatened to unravel a 60-day interim agreement to end the war.

Vice President JD Vance led the US delegation in the Swiss mountain resort of Bürgenstock alongside Jared Kushner and Steve Witkoff, while Parliament Speaker Mohammad Bagher Qalibaf and Foreign Minister Abbas Araghchi headed the Iranian side. Direct engagement lasted about 80 minutes, according to Iranian state media, with technical teams expected to remain in Switzerland through Monday.

"There is an opportunity to turn over a new leaf," Vance told reporters before the talks. "Can we change relations in the Middle East permanently, or do we go back to doing things the old way?"

The urgency stems from competing claims over the Strait of Hormuz, through which about 21 percent of the world's oil passes. Iran's joint military command announced Saturday it had again closed the waterway, citing Israel's continued attacks in Lebanon and what it described as US "bad faith" in failing to enforce a ceasefire. US Central Command disputed the claim, saying 55 merchant ships transited Saturday carrying more than 17 million barrels of oil without interruption.

President Donald Trump responded by threatening to impose US-controlled tolls on the waterway if a final deal is not reached within 60 days, calling the fees compensation for "services rendered as the Guardian Angel to the countries of the Middle East." The interim agreement signed earlier this week calls for toll-free travel during the 60-day negotiating window.

The Strait of Hormuz has emerged as the central pressure point in the negotiations. Iran's previous closure threats in 2019 and 2023 never fully materialized, but the current standoff comes amid active military conflict. The last time a major shipping chokepoint faced a sustained disruption threat — the 2021 Suez Canal blockage — global trade losses exceeded $9 billion per day, according to Lloyd's List.

On the ground in Lebanon, fighting continued despite a ceasefire brokered Saturday between Israel and Hezbollah. Israeli strikes killed at least 16 people, including two children, while Hezbollah fired more than 50 projectiles at Israeli forces in southern Lebanon. The death toll has surpassed 4,000 since the conflict began, Lebanon's health ministry said. Five Israeli soldiers were killed in the past 48 hours.

Iranian Foreign Ministry spokesperson Esmail Baghaei struck a cautious tone ahead of the talks, telling state TV that negotiations toward a final agreement will begin only once key commitments are upheld. "If they are not, the memorandum of understanding as a whole will be jeopardized," he said.

The interim deal gives negotiators 60 days to reach a comprehensive nuclear agreement, though the timeline can be extended. Iran's central bank governor Nasser Hemmati also traveled to Switzerland, signaling that discussions over unfreezing billions of dollars of Iranian assets are on the table.

For markets, the stakes are clear. Brent crude has priced in a risk premium since the Feb. 28 outbreak of hostilities, and any breakdown in talks could push oil prices sharply higher while driving safe-haven flows into gold and the dollar. A successful deal, by contrast, could unlock Iranian oil exports and ease supply constraints.

This article is for informational purposes only and does not constitute investment advice.