Three layers of mistrust behind US-Iran deadlock

After a 40-day war, Iran and the United States returned to the negotiating table in Islamabad for 21 hours of high-level talks that ended without agreement. A day later, US President Donald Trump announced a naval blockade of the Strait of Hormuz and Tehran said it would not negotiate under threat.

What the Islamabad talks made clear is that mistrust is not a single obstacle but a three-layered structure.

The first layer is structural, rooted in conflicting historical narratives and incompatible visions of the future. The second is tactical, visible in disputes over agenda, sequencing and guarantees. The third—and perhaps most acute in current circumstances—is mistrust in the negotiating teams themselves, both across the table and within each country’s political establishment.

Understanding these layers is essential to any realistic assessment of whether negotiations can succeed.

Structural mistrust

Washington often traces the hostility to the 1979 seizure of the US embassy in Tehran and the anti-American ideology that followed, from chants of “Death to America” to attacks by Iran-backed armed groups across the region.

Tehran begins its story in 1953, when the US and Britain backed the coup against Prime Minister Mohammad Mossadegh. Iranian officials portray Washington as a colonial power bent on undermining Iran’s sovereignty and independence.

Successive conflicts have deepened these narratives: the eight-year Iran-Iraq war, last year’s 12-day war, and now a 40-day conflict with the United States.

Iranian Foreign Minister Abbas Araghchi recently summed up the mood when he said hostility would endure “as long as America is America and the Islamic Republic is the Islamic Republic.”

In such an environment, diplomatic gestures are easily interpreted as tactical deception rather than genuine attempts at compromise. Compounding the problem is the absence of any shared vision for a post-war settlement.

Trump speaks of a “big deal” but has not clearly defined what that means in diplomatic or regional security terms. Tehran speaks of ending the war “with victory” without clarifying whether that means restoring the status quo or securing recognition of its regional role.

Negotiation without a shared end state is less a path to resolution than a continuation of war by other means.

This is one reason the 2015 nuclear deal, the Joint Comprehensive Plan of Action, proved fragile: both sides treated it as a temporary management tool, not a new beginning.

Tactical mistrust

Hardline Iranian lawmaker Mahmoud Nabavian, who was reportedly involved in the Islamabad talks, called the inclusion of the nuclear issue a “strategic mistake,” arguing it encouraged US demands such as removing nuclear material from Iran or suspending enrichment for decades.

Yet Washington has repeatedly framed the core issue as preventing Iran from obtaining a nuclear weapon. Trump has at times spoken of dismantling Iran’s nuclear infrastructure entirely.

Even third parties have hinted at confusion. Turkish Foreign Minister Hakan Fidan has suggested both sides have issues to discuss, but no agreed text or framework yet exists.

Tehran reportedly presented a 10-point proposal to end the war. According to Axios, Washington responded with a three-page counterproposal.

What is described publicly as negotiation often looks more like two parallel monologues.

Another unresolved question is sequencing. Iran says it will not negotiate under threat and has demanded an end to the naval blockade as a precondition. Washington expects Iran to reopen the Strait of Hormuz and present a unified proposal.

When Trump extended a ceasefire on April 21, he said it would last only until Iran’s leaders and representatives could produce “a unified proposal.” In Tehran, such language was interpreted less as an invitation to talks than as coercion.

Mistrust in negotiators

Layered on top of these disputes is growing mistrust in the negotiators themselves.

Many in Tehran doubt whether the US side has the authority to deliver. Mohammad-Amin Imanjani, editor of the hardline Iranian newspaper Farhikhtegan, dismissed Trump’s envoys as lacking sufficient understanding of Iran and failing to properly convey Tehran’s demands.

Iranian state media has echoed such doubts, particularly regarding the role and authority of US intermediaries.

For Washington, the issue is both Tehran’s authority to deliver and the belief that it is not negotiating with one voice.

The result was visible in the rhetoric after Islamabad. As he left the city, US Vice President JD Vance reportedly said Washington had presented its “best and final” offer and that walking away would hurt Iran more than America.

Iranian parliament speaker Mohammad Bagher Ghalibaf responded by accusing Washington of failing to earn Tehran’s trust. The two narratives barely intersect.

Is a deal still possible?

Negotiations built on three layers of mistrust are unlikely to produce more than temporary arrangements. To make progress, both sides would first need to restore confidence in the process itself.

But the deeper obstacle may remain unchanged: both sides appear to believe they still have more to gain through pressure than compromise.

Washington may calculate that military and economic pressure has not yet reached breaking point. Tehran may believe it has demonstrated enough resilience to extract concessions from a position of strength.

As long as both see escalation as more rewarding than accommodation, diplomacy will struggle.

The danger is that the conflict may not spiral through one dramatic rupture, but through a series of smaller decisions—each rational in isolation—that move both sides further from any durable agreement.

Figures from Iran’s customs administration show non-oil trade collapsed in the final month of the previous Iranian fiscal year (February 21–March 22), falling to just $6.4 billion—down 30% from the previous month and 50% from a year earlier.

The plunge coincided with military escalation that began on February 28, when US and Israel attacked Iran and Iran retaliated with strikes against Arab neighbours across the Persian Gulf.

The conflict disrupted shipping routes and strained regional trade links.

The fallout has been especially visible in trade with Iran’s main commercial partners. The United Arab Emirates, Iran’s second-largest trading partner, reportedly suspended trade with Tehran in early March.

Chinese customs data also point to a steep decline in bilateral trade. China’s non-oil trade with Iran fell to just $184 million in March, compared with more than $907 million in the same month last year—roughly one-fifth of its level a year earlier.

While Iranian customs data exclude crude oil exports, tanker-tracking data from Kpler indicate Iranian crude deliveries to Chinese ports averaged around 1.53 million barrels per day in March, about 15% lower than in March 2025, suggesting energy exports are also under pressure.

In total, Iran’s non-oil foreign trade during the last fiscal year stood at $109 billion, down 16% from the previous year. Imports accounted for 53% of the total, underscoring the economy’s reliance on foreign supplies at a time of escalating geopolitical disruption.

The outlook may worsen in the months ahead.

Following Israeli strikes on petrochemical facilities, Iran has banned petrochemical exports. On Monday, the Iran Trade Promotion Organization ordered a halt to exports of steel slabs and sheets until May 30 as the country’s steel industry came under pressure following US-Israeli strikes.

The secretary of Iran’s steel producers’ association said work was underway on an urgent plan to import steel slabs and hot-rolled sheets, underscoring the scale of the disruption.

At the same time, steel production facilities in Isfahan and Khuzestan—which account for roughly 70% of Iran’s steel output—have reportedly suffered major damage.

Together, petrochemicals and steel generate an estimated $18 billion to $20 billion in annual exports, accounting for more than one-third of Iran’s non-oil export revenues. Prolonged disruption in those sectors would hit government revenues, industrial output and access to foreign currency.

Additional pressure is also emerging at sea. In response to Iran’s move to block the Strait of Hormuz, the United States has begun enforcing a naval blockade on Iran, a development likely to further restrict both oil and non-oil trade.

With US-Iran diplomacy still deadlocked and sanctions relief appearing distant, the outlook could worsen further in the absence of a deal to ease pressure on trade and energy exports.

Taken together, the data suggest Iran may be facing not a temporary slowdown but the early stages of a historic external shock.

Amid Iran’s closure of the Strait of Hormuz and the ensuing US blockade, an old energy fantasy has resurfaced that cutting off a country’s oil exports works like flipping a switch. But reality is less cinematic and far more uncomfortable.

If Iran faced a serious maritime blockade, its oil system would not collapse overnight. It would absorb the shock, adapt, and only gradually tighten under pressure.

That distinction between sudden failure and slow strain is not just technical. It is the difference between a crisis markets can price instantly and one that unfolds in uneasy stages.

As Washington says its blockade is tightening around Tehran, understanding that distinction matters.

Read the full article here.

If Iran faced a serious maritime blockade, its oil system would not collapse overnight. It would absorb the shock, adapt, and only gradually tighten under pressure.

That distinction between sudden failure and slow strain is not just technical. It is the difference between a crisis markets can price instantly and one that unfolds in uneasy stages.

As Washington says its blockade is tightening around Tehran, understanding that distinction matters.

Kharg Island: The pressure point

Nearly all of Iran’s crude exports flow through Kharg Island, which handles about 90 percent of outbound shipments. On a typical day, that means roughly 1.5 to 2 million barrels moving through its loading facilities.

Kharg is more than a transit point. It is also a buffer. With storage capacity estimated at between 20 and 30 million barrels, the island allows Iran to keep producing even when export schedules fluctuate.

Under blockade conditions, that flexibility becomes a liability. If tankers cannot load or leave reliably, crude begins accumulating in storage. At current export levels, even the upper bound of capacity could be filled in a matter of weeks.

The island would not fail immediately. But it would begin operating under a visible constraint: every additional barrel has fewer places to go.

When storage becomes a bottleneck

Oil systems are built with redundancy. Storage tanks, pipelines and floating storage options all provide breathing room. That is why disruption rarely produces instant collapse.

In a blockade scenario, Iran would likely continue exporting in reduced and irregular ways at first. Some cargoes might slip through via evasive shipping practices. Others could be rerouted or delayed. Meanwhile, crude that cannot be exported would accumulate in storage tanks on Kharg and elsewhere.

But storage is finite. As tanks fill, flexibility narrows. The system shifts from optimizing flows to managing congestion.

Operators are no longer asking how to move oil efficiently, but how to avoid hitting physical limits. This is the quiet phase of disruption: no dramatic cutoff, just a steady tightening that forces increasingly constrained choices.

Adaptation under pressure

Iran’s oil sector is no stranger to operating under constraint. Years of sanctions have trained it to improvise.

Cargoes could still move through ship-to-ship transfers and opaque shipping routes designed to obscure origin and destination. Parts of the tanker fleet could be repurposed as floating storage to buy time offshore as onshore tanks fill.

Production would not stop overnight but would likely be trimmed gradually, with operators calibrating output to avoid overwhelming storage while trying to preserve reservoir integrity.

Domestic refiners could absorb some additional crude, and inland storage might be stretched, though both options are limited and cannot fully offset lost export capacity.

These responses would not neutralize the impact of a blockade. But they would slow its effects, allowing the system to continue functioning in a constrained and increasingly inefficient state.

The result is not resilience so much as endurance: the ability to delay more severe disruptions.

The limits beneath the surface

What happens underground imposes its own discipline.

Oil reservoirs are not infinitely flexible. Shutting in production, especially in mature fields, can damage reservoir pressure and reduce long-term recovery.

That means Iran cannot simply halt output the moment storage fills. Production cuts must be sequenced carefully, prioritizing fields that can be shut in safely while protecting long-term capacity.

The system slows, recalibrates and absorbs damage where it must, all while trying to avoid irreversible losses.

Pressure builds, markets adjust

For global markets and policymakers, the difference between a sudden cutoff and a gradual squeeze is critical.

A sharp disruption would trigger immediate price spikes and emergency responses. A slower, adaptive contraction produces a different dynamic. Prices may rise in stages. Other producers have time to respond.

Strategic reserves can be deployed more deliberately. Trade flows can be rerouted.

Yet this slower progression carries its own risks. It creates uncertainty rather than clarity and tempts decision-makers to underestimate the severity of the situation, even as constraints tighten.

No switch, just strain

A blockade of Iran’s oil exports would not look like a sudden shutdown. It would resemble a system under mounting pressure, adapting in real time while steadily losing room to maneuver.

For Iran, the effect is less a collapse than a managed deterioration. Revenues would erode, costs would rise, and each workaround would become harder to sustain.

For global markets, the danger lies in misreading that slow burn as stability.

By the time constraints converge into something more acute, the system may already be far closer to its limits than it appears.

Recent tracking data suggesting Iran is still moving millions of barrels of crude despite a US naval blockade has raised fresh questions about the effectiveness of Washington’s effort to choke off Tehran’s oil exports.

TankerTrackers.com on Sunday cited satellite images that it said showed Iran loaded at least 4.6 million barrels of crude at export terminals in recent days, with another four million barrels appearing to have crossed the US blockade line.

The figures suggest Tehran retains at least some ability to keep oil flowing despite a US naval blockade launched nearly two weeks ago and repeated claims from Washington that the operation is crippling Iran’s maritime trade.

Read the full article here.