Two events of genuine historic weight are unfolding simultaneously on Saturday morning in Islamabad and in the Strait of Hormuz. In Pakistan’s capital, US Vice President JD Vance is sitting across from Iranian Foreign Minister Abbas Araghchi and Parliament Speaker Mohammad Bagher Ghalibaf — direct, face-to-face negotiations between the United States and Iran, the first of their kind since the founding of the Islamic Republic in 1979. In the Strait of Hormuz, three supertankers — the Liberia-flagged Very Large Crude Carrier (VLCC) Serifos and the China-flagged VLCCs Cospearl Lake and He Rong Hai — appear to be transiting the waterway. If all three complete passage, it marks the largest single-day oil exit from the Persian Gulf since the war began on February 28.
These two developments are not coincidental. The Hormuz movement is happening while Vance is in the room. It is either a deliberate signal by Iran that it is prepared to negotiate in good faith, or a byproduct of the US military operations Trump announced this morning. Trump posted on Truth Social that the US is “clearing out the Strait of Hormuz” and claimed all 28 Iranian mine-dropper boats have been sunk. Iran and Pakistan denied any US naval transit. The dueling claims are unresolved, but the ships are moving. A US official confirmed to CBS News that no agreements have been made yet. Al Jazeera’s sources reported “some progress” on the Lebanon conditions and possible movement on Iranian frozen assets. Pakistan remains “very hopeful.” The Watch is tracking live.
Three supertankers appear to be transiting the Strait of Hormuz on Saturday, according to ship tracking data. The Liberia-flagged VLCC Serifos moved through first, followed by two China-flagged VLCCs — Cospearl Lake and He Rong Hai — each carrying approximately 300,000 tonnes of crude. A Botswana-flagged liquefied natural gas (LNG) tanker, the Nidi, also succeeded in reaching the Gulf of Oman after turning back on Friday. None of the vessels have obvious direct ties to Iran. Bloomberg confirmed two Chinese supertankers laden with crude are appearing to transit, describing it as a “significant uptick” in oil shipping traffic.
For context: before the war, approximately 100 ships transited the Strait daily. Since March 1, the average has been roughly 1.6 oil tankers per day in both directions — a figure inflated by a single unexplained surge of 23 vessels on March 12. Saturday’s three VLCCs, each carrying ~2 million barrels, represent a meaningful physical signal even as a fraction of pre-war norms. Kevin Hassett, Director of the White House National Economic Council, noted this week that even a single VLCC transit represents “a huge chunk of what’s missing.” The ships are taking the northern route close to the Iranian coast — indicating Iran remains in practical control of access.
Saturday’s tanker movement is the most significant physical development in Hormuz since the war began, but it must be read carefully. The ships transiting are Chinese-flagged or sailing close to the Iranian coast — consistent with Iran’s established pattern of granting selective access to friendly nations while blocking Western-flagged vessels. Iran “has maintained the current conditions for tanker transit through the Strait of Hormuz,” Iranian semi-official news agency Tasnim reported Saturday, citing Iran’s claim that US ceasefire breaches in Lebanon justify continued restrictions.
Western shipping companies remain on the sidelines. Hapag-Lloyd, the world’s fifth-largest shipping company, has six container ships trapped in the strait but is keeping them put, declining to move without explicit safety assurances and a clear protocol. eToro’s global market analyst told CNN it could take six months to get ship traffic back to pre-war volumes — even with a diplomatic breakthrough today. The physical infrastructure of trust takes longer to rebuild than a communiqué takes to draft. Saturday’s movement is a signal. It is not normalization.
The talks in Islamabad began after a delay caused by Iran’s preconditions. Ghalibaf demanded a ceasefire in Lebanon and the release of Iran’s frozen assets before negotiations could commence. Both sides met separately with Pakistani Prime Minister Shehbaz Sharif first, then moved to direct engagement. Al Jazeera’s correspondent in Islamabad, citing sources close to the mediation, reported “some progress made on basic conditions, including on the need for a ceasefire in Lebanon” — with reports of a possible understanding to limit Israeli strikes to southern Lebanon rather than a full halt. The same source said “there could be some movement on the unfreezing” of Iranian assets, with Qatar holding approximately $6 billion in Iranian funds that the US Treasury would need to authorize for release.
Saudi Arabia sent Finance Minister Mohammed al-Jadaan to Islamabad on Saturday in a show of “economic support,” a signal of Gulf states’ stake in the outcome. The Iran delegation of more than 70 people was flown in under Pakistani Air Force F-16 escort. Vance, speaking before departure, said he expected a positive outcome but warned: “If they’re going to try to play us, then they’re going to find the negotiating team is not that receptive.” Iran’s Ghalibaf arrived with an explicitly adversarial framing: “Our experience in negotiating with the Americans has always been met with failure and broken promises.” The official US posture from Trump: “Whatever — otherwise we’ll reset. We’re ready to go.”
A US official confirmed to CBS News as of this morning: no agreements have been made. Pakistan remains “very hopeful about the possibility of a breakthrough,” per Al Jazeera’s correspondent. The talks are ongoing.
Israeli airstrikes hit southern Lebanon in the early hours of Saturday, targeting Nabatieh and the town of Mefdoun. The Lebanese state-run National News Agency confirmed three people were killed when aircraft struck a residential building. Additional strikes hit the town of Toul near Nabatieh and set an electricity complex ablaze in Jebchit. Smoke was visible from multiple locations in southern Lebanon at dawn, as Vance was simultaneously en route to Islamabad.
This is the fault line that Iran has made non-negotiable. Iran publicly insists that Lebanon is covered under the ceasefire terms agreed April 8. Israeli Prime Minister Benjamin Netanyahu, backed by Trump and Vance, has maintained that the ceasefire “does not include Lebanon.” Iran’s semi-official Tasnim agency reported Saturday that Iran “has maintained the current conditions for tanker transit” specifically in response to what Tehran characterizes as US ceasefire violations through Israeli Lebanon strikes. The Lebanon question and the Hormuz question are directly linked in Iran’s negotiating position: until Lebanon is resolved, full Hormuz access is withheld.
Al Jazeera’s sources suggest the room may be working toward a geographic compromise: a possible understanding that Israeli strikes be limited to southern Lebanon, stopping short of Beirut and civilian infrastructure further north. This would not satisfy Iran’s stated demand for a full halt, but may provide enough cover for Araghchi to claim the Lebanon commitment has been partially honored. Whether Israel accepts any geographic constraint — even informally — is the critical sub-question. A US–Israel meeting on Lebanon is reportedly scheduled in Washington next week.
The Lebanon issue will not be fully resolved in Islamabad on Saturday. The question is whether the parties can agree to enough of a formula — a planned de-escalation pathway, a geographic limit, a timeline — to keep the talks alive and allow movement on the Hormuz protocol. If Lebanon breaks the talks, it will break them today.
Iran’s semi-official Tasnim news agency published Tehran’s stated demands ahead of Saturday’s talks. They go significantly beyond Hormuz reopening. In full: full sovereignty over the Strait of Hormuz (meaning Iran retains the right to control access), complete war reparations from “the aggressor,” unconditional release of all blocked Iranian assets, and a durable ceasefire across the entire West Asia region — explicitly including Lebanon. The US entered Saturday with one stated non-negotiable: zero uranium enrichment inside Iran. These positions do not overlap.
The frozen assets question may be the most tractable fault line. Qatar holds approximately $6 billion in Iranian funds. A US official denied Saturday morning that the US had agreed to release them, but the denial itself signals the assets are on the table. The reparations demand is the least tractable — the US has shown no willingness to discuss war damages, and no prior ceasefire framework has included this language. The enrichment question is structurally the most dangerous: Iran’s 10-point proposal submitted to the US via Pakistan in early April included a “suspension” of enrichment for several years, not elimination. Trump’s stated position is zero enrichment, permanent. The gap between suspension and elimination is where nuclear negotiations have broken down historically.
What markets need from Islamabad is not a resolution of all four demands. They need one thing: agreed language on a Hormuz reopening timeline, even a provisional one, that allows commercial shipping to resume. Everything else can be negotiated in the 45-day Phase 2 window the ceasefire framework envisaged. But Iran has tied Hormuz to Lebanon. And Lebanon is still being bombed.
Sunday equity futures open at 6PM ET. WTI futures open at the same time. The Islamabad outcome — whatever it is — will be the only data point that matters for Monday’s open. Friday’s close (S&P 6,816.89, VIX 19.49, WTI $98.45) is the baseline. Here are the three scenarios and their expected market impact at Monday’s open:
Iran has explicitly tied Hormuz to Lebanon. If Israeli strikes escalate in the hours Vance is in the room, Iran’s delegation has grounds — and domestic pressure — to walk out. A single major strike on a Lebanese city (not just southern villages) likely ends Saturday’s talks immediately. Iran’s Tasnim already confirmed transit conditions remain in place “in response to” Lebanon violations. The fault line is live and active.
Trump told the New York Post on Friday that US warships are being loaded with “the best ammunition” for a resumption of strikes if talks fail. He’s simultaneously claiming to be clearing Hormuz militarily. If Trump announces a “reset” — his term for resumed military operations — before a communiqué is reached, it collapses the talks and triggers Scenario C at Monday’s open. The window between “talks ongoing” and “reset” is Trump’s alone to manage.
Even if Islamabad produces agreed language on Hormuz today, eToro’s analysts estimate it could take six months to restore ship traffic to pre-war volumes. Mines still exist. Western shippers need safety assurances, explicit protocols, and Iranian IRGC (Islamic Revolutionary Guard Corps) guarantees before sending vessels in. Hapag-Lloyd won’t move its six trapped ships on a communiqué alone. The oil supply normalization timeline is longer than the market currently prices in the $98 floor.