Instant Reaction: Trump Extends Iran Truce, Maintains Blockade as Talks Falter

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2:20Visit BajaMar.com today and discover a vacation destination where memories are made for a lifetime. Bahamar. Life spectacular. Bloomberg Audio Studios. Podcasts. Radio. News. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3 ,000 journalists and analysts around the world. Let's go back to Washington because we are seeing a little bit of those gains in oil. give those back after the president says he's extending the Iran ceasefire until talks conclude. That's according to his post on Truth Social. I want to bring in Wendy Benjaminson, senior editor for Washington, D.C.

3:06Weekends for Bloomberg News. She joins us from Washington, D.C. Wendy, good to have you back with us. You know, we appreciate you kind of standing by on this developing situation. But we spoke to you in the two o 'clock hour about this idea that, well, the president said he will not extend the deadline yesterday, but it does not look like that Vice President Vance is going to Pakistan for these talks. And yet here we are after the market closed. The president says, I am extending this deadline. What can you tell us? Well, forget everything I said at two o 'clock. Thank you. But basically, there's been a flurry of negotiations and diplomacy going back and forth in these last two hours, where it appeared that Vance, that the White House was sort of letting it be known that Vance was not going to go to Pakistan.

3:55And then it turns out that Iran had informed the mediators, which is Pakistan, and Pakistan informed the U.S. that they weren't going to show up at the talks, that they saw no reason to show up at the talks. And then we got that true social posts from the president that said, you know, that sounds like he had spoken to the Pakistanis. In fact, he named the Pakistani officials he spoke to and said, you know, so there's no basis for talks now, but we're going to keep up the blockade, which is something that's really irritating Iran, and then keep the ceasefire going for until there's room to talk.

4:36Look, the only problem with that is, and the one thing I think I did say at two o 'clock, was that Iran is saying as long as the blockade is in place, they're not going to talk. Right. So the U.S. is keeping the blockade in place. Exactly. So I'm not sure what's going on. There's some reporting from some of our colleagues around town that Iran saw some evidence that the U.S. might be ready to ease up on the blockade. But it sure didn't sound like that from this post from the president. So can I ask you something? Are we seeing the sausage made or the diplomacy sausage being made? Like, tell me, diplomatic channels, if we weren't with this White House, this president, and behavior where you use social media to kind of get messages out, like, is this what normally goes on in diplomatic channels of this back and forth?

5:32But we just don't ever hear it. No. This is unusual. Okay. This is highly unusual. I mean, I covered the talks that led up to the Obama-Iran nuclear deal. That took 20 months with huge delegations on both sides just hunkered down. I mean, they'd occasionally go back to their home countries, but 20 months, almost two years of in-depth negotiations. And that with nuclear physicists on both sides, in addition to diplomats, And it turned out that even that I mean, at the end of that, 97 percent of Iran's enriched uranium had left the country and they only got it back when Trump tore up the deal. Now we have, and to Trump's point in his True Social post, now we have a fractured Iranian government.

6:27There's probably some power vacuums there, so we're not really sure. Is it the parliament speaker? Is it the president? Is it the Ayatollah? Is it the IRGC? Who's running that country? And then you have Trump's diplomacy by True Social. So it's not like anything we've experienced before. Wendy, does the power of the president's post lose a little bit of weight as the process continues? And the reason I ask is because here we are where the market barely moved. And again, I'm going by the market here, but the market barely moved when it was reported that Vice President Vance's trip had been canceled.

7:07And there was only 24 hours until this next deadline of a ceasefire would conclude. that wasn't enough time for any sort of agreement to be reached. The president had said he will not extend the deadline. Obviously the markets thought he would extend the deadline and sure enough he did. So I guess my question is, does do, do, because he's, he's, he honestly like, I, it's kind of like when I threatened my kid with, you know, if, if, you know, I'm going to count to three, just say it. Can you just say the word? What? I'm no, I'm not, I'm not saying the word. I'm not going to say the word. I might draw a picture.

7:41I mean, this I'm with um Mako I mean like I do wonder like you know sorry I will pull this car over but I do like do are people sitting in Iran saying he's not gonna do it yeah like I I'm not quite well I think so but I think also they're also changing their positions. They're opening the strait. They're closing the strait. They're saying the blockade is a war crime. So there's a lot of craziness, not craziness. There's a lot of unpredictable movement going on on that side. And then you do have Trump, who, of course, likes to keep people unsettled, right? But I think what the, far be it from me, this is your area of expertise, to explain the markets.

8:37But I do think they've sort of gotten to know Trump, right? And the deadline is approaching. Vance hasn't left. You know, he says he's going to bomb, but he didn't really seem to have his heart in starting the whole war again because of the political impact in the United States as his approval ratings just keep plummeting. And so it could be that the market was just what you were saying, Carol, that he was going to taco. And, you know, and he certainly made a decision that fits that narrative. Terry Haynes is with us. We want to jump on with him, founder at Pangea Policy in the nation's capital.

9:12Terry, good to have you here. The back and forth continues your read on the situation. Tim. Good to be here, Carol and Tim. My read is very simply that the markets obviously will take this positively, but I would have and continue to caution that any cheerfulness on markets part is very temporary. Two things are going on. One, I think one we knew, one we can surmise. the one thing we knew is that ever since at least last weekend, the Iranian government hasn't had a unified proposal. And that's now has not only been clear before, it's doubly clear now because this continuation of the ceasefire has been, according to Trump, has been asked for by the Pakistanis in order to basically goad the Iranians into a unified position.

10:08So it's temporary on that basis, number one. Number two, I think what you ought to assume is that the United States will step back in, not only keeping the blockade of Iran in the strait, but will step in militarily and re-escalate should it be needed. People talk about this as if it's all one thing or the other, as if Trump's putting his foot on the gas or putting his foot on the brake. And it's a little more complicated than that. Yeah, it's never so black and white. We just want to we're talking with Terry Haynes of Pangea policy. Just the headline now at this story and what's certainly top of mind for us.

10:48President Donald Trump said he would extend the ceasefire with Iran after plans for diplomatic talks between the two countries were scrapped. You might recall that he did say that while also the U.S. would hold off on fresh attacks, it would maintain its blockade on the Strait of Hormuz, of course, the vital waterway for oil shipments. Vice President J.D. Vance was due to travel to Pakistan to resume talks with Iran, but representatives from Tehran refused to attend, citing unreasonable U.S. demands. President Trump blaming the collapse of negotiations on a seriously fractured leadership structure in Iran.

11:20But Iran is also, there was a foreign minister came out and was not very happy about this blockade, saying that that was a violation of the ceasefire. I want to also bring in Adam Farah, Bloomberg Economics, senior geoeconomics analyst for Asia Pacific, who's watching these developments closely. Adam, I want to go to the blockade question that Carol mentioned. If the U.S. keeps the blockade in place, but Iran says we will not negotiate until the blockade is not in place, then where does this leave room for a deal to be reached? There's simply no question that we have a chicken or egg problem here.

11:53And it remains very much unclear what is driving Iran's position moving forward. I mean, just today, it was said very clearly from the foreign minister that they see the U.S. blockade as an act of war and a violation of the ceasefire. And so, you know, while the president obviously has come out already here and said that he plans to extend it, you know, in some extent for quite some time without putting a deadline on it this time, there is, you know, another party involved here and the Iranians get a vote. And with the United States taking increasing actions to seize Iranian vessels, there is this question of whether and how Iran will respond.

12:32After the action over the weekend that saw the disablement and seizure of an Iranian cargo ship, Iran explicitly said that they would retaliate, although we haven't seen that as of yet. So right now, we don't know how Iran will read the U.S. actions and how long we really are looking at come. Terry, I want to bring you back in. And Terry, for Iran, it's existential, right? And the ability to have nuclear weapons. We've had many people say that to us. And I think about, we're not talking a lot about Israel, but our Wendy Benjaminson just brought it up. Let's not forget, Israel's also a player in this.

13:09And Israel and Pakistan don't have diplomatic relations. So that makes things even more complicated from a negotiations perspective. And existential for them. I don't know how you get out of this. Well, stop saying existential. for one thing. I'm kidding, kidding, kidding. I get paid by the existential. Exactly. The how you get out of it. Firstly, you keep as much pressure on Iran as possible. You don't, you know, in a world of split government, you split governments. You don't know who you're negotiating with. That increases the peril of the situation, but it also makes it more important to keep maximum pressure on them.

13:49So the net-net is the blockade will continue. You notice that Iran didn't start objecting to the blockade as an act of war and a violation of the ceasefire until about three or four days in, which probably tells you they're a little bit more extremist than anything else. Secondly, you've got a situation where you're absolutely right that Israel and Pakistan have no relations, but who do they talk formally? Who do they talk through? The United States informally. They talk through the Gulf nations. And of course, Israel and Pakistan very likely have their own informal direct channels through all this.

14:31And it's not for nothing that the Iranians came to the table a little bit more when Israel let up slightly on Iran's proxy, Hezbollah. So what you have is a situation where this is essentially a grinded out situation. You continue to put maximum pressure on both Iran and make it clear that the proxies are not going to get away scot-free, whether it be Hezbollah or whether it be any of the other proxies who periodically threaten the Bab al-Mandeb strait on the other side of the Red Sea. and you work through two other intermediaries. You work through China, who's been on pretty much all sides of this.

15:17I think missed in much of the United States media has been that Xi Jinping told the Saudi crown prince yesterday that he thought the straits should be open. Now, China's been doing some things that are in this conflict that are hostile to us, But if they follow through on the on what President Xi has been saying, then what you have is a situation where they may well be putting more pressure on Iran to come through. And I'll pretty much stop there. But this is a kind of a maximum pressure grinded out strategy. Well, this is Adam's specialty. So I want to bring him back in. Adam Fair, Bloomberg Economics, senior geopolitics analyst for Asia Pacific.

15:56On the China portion of this that we just heard from Terry Haynes over at Pangea Policy, where is China in this? And can China play a role in actually ending this conflict? So China can certainly play a role. They have very strong relations with Iran and the Gulf states as well. And honestly, the relationship with the Gulf states being arguably more important for China in the long term. But so far, their actions have been quite limited. They've taken a backseat supporting Pakistan's mediation and watching as this moves forward. There's certainly likely back-channel work and conversations with Iran and some diplomatic engagement with the Gulf emphasizing de-escalation.

16:40But so far, they're not leading the way, which is in line with how they've approached conflicts in the past. Instead, seeking to support partners, particularly after conflicts have ended. That said, they have a lot at risk here. And I think we often lose sight of the fact that the continued closure of the Strait of Hormuz puts extreme pressure on the entire global economy, but particularly Asia. And while China has an ample oil reserve that they're relying on and has diversified extensively in their energy mix with renewables, they're still very exposed to the oil shock that is moving through the economy and could have an outsized impact not only on, you know, particularly Southeast Asian economies that are about to get hit first, but global demand and demand for Chinese goods.

17:30So they have a lot of interest in getting this resolved, but so far have not taken those bigger steps to try and push for an off ramp. I want to bring in Ambassador James F. Jeffrey, the Philip Salon's distinguished fellow at the Washington Institute in Washington, D.C. He was an ambassador in Turkey and Iraq. He served as an assistant to the president and deputy national security advisor in the George W. Bush administration with a special focus on Iran. Just give us your view on the latest development here and how these two parties come together if the U.S. continues to blockade and Iran says we will not talk unless this blockade is lifted.

18:10Well, first, let me take that point. First of all, the Iranian position is outrageous. They blocked the straits for everybody else. Trump gave them weeks where they could continue to ship their oil out. Nobody else could while they tried to get a solution. He entered a ceasefire. And then finally, when the first negotiating round didn't work, he imposed the blockade. The blockade is forcing the Iranians to rethink. Two ways to look at what Trump has just done. One is less likely he's afraid that new military operations would lead to a massive Iranian retaliation on the Gulf states and Israel. That doesn't seem to be a major military concern, but I put it out there.

18:51The other possibility is that he's heard from the Pakistanis that the divisions within Iran, which is seemingly the main reason why we didn't have the negotiations tomorrow, is driven by a demand that the United States take the threat of war, at least off the table. So Trump has done that. He's made a concession. It's not a big one. And we'll see what happens with the Iranians. If they do not come back with a significant offer that we can work with, then I think Trump will revisit the returning to military operations card. Is there some realistic resolution here, Mr. Ambassador? I mean, we talked to Terry Haynes of Pangea Policy, and he said what the Iranians want is they want to have uranium for civilian purposes.

19:47They also want to, I think, maintain their regime. Do you agree? And is there a solution to be had if that's what the Iranians indeed want? OK, first mistake. This is not a war that we began. This is another campaign in a war that the most active phase that's gone back decades started with the Hamas, an Iranian proxy attack on Israel, joined soon after by other Iranian proxies and then Iran itself and two missile barrages in 2024. So this is another campaign. Iran wants its enrichment program not so it can have scientific pride in itself, but it wants it as a tool for either a nuclear weapon or to leverage, not having a nuclear weapon, for gradual control of the region.

20:39This has been the goal of that regime since 1979. And it's why people don't get that. Will they accept, over a period of time, ratcheting back the nuclear program to something that looks like a civilian program? Yes, and that's what Trump is planning on. Buying 12 or 15 years wouldn't be a bad idea. 20 would be even better, but the Iranians have said they don't want that. So you will get another success. The difference between now and when Obama did the deal was that Iran and its proxies have been much, much weakened in the region. they're not in as good a shape. And that's another plus. So, Ambassador, how does this war end and what's a realistic timeline for us to think about?

21:22It will end like all wars with negotiations. It will end with compromise on both the American and the Iranian side that will result in some period of time. Trump will be very, very insistent. It's better than the Obama 2015 deal of Iran not moving closer to a nuclear fizzle material for nuclear weapon. Will it be better? What? Will it be a better deal? Is it possible for it to be a better deal? Of course. The Iranians supposedly agreed, at least for five years, to stop enrichment. They never agreed to that in the Obama JCPOA. So they're already on the table of stopping at least temporarily enrichment.

22:02So yeah, it could well be a better deal. Whether it will be, that's another question. But again, that and the lifting of the dual embargoes on the Straits are the main elements of any deal. The deal will come. The question is when. Time is working against Trump in terms of the elections and, of course, as you've been reporting, the economic costs for many of our partners and allies. But it's also not working in the case of Iran either because of the total embargo that we've imposed on all ships going in or out.

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