Marathon negotiations between Iran and the US in Islamabad ended without an agreement on Sunday morning, pushing the fragile two-week ceasefire closer to collapse.
Speaking at a press conference, US Vice President JD Vance said that the US negotiating team would leave Pakistan having failed to come to an agreement.
"We leave here with a very simple proposal, a method of understanding that is our final and best offer. We'll see if the Iranians accept it," he told reporters after 21 hours of talks in the Pakistani capital.
"They have chosen not to accept our terms."
Iran had earlier said that negotiations would continue despite lingering differences, including over the Strait of Hormuz.
Vance had led the American team, which also included special envoy Steve Witkoff and President Donald Trump's son-in-law Jared Kushner. The Iranian delegation was headed up by Parliamentary Speaker Mohammad Baqer Qalibaf and Foreign Minister Abbas Araghchi.
Vance declined to provide details about the areas of disagreement, saying only that Iran had not provided assurances over the future of its nuclear programme.
"The simple fact is that we need to see an affirmative commitment that they will not seek a nuclear weapon and they will not seek the tools that will enable them to quickly achieve a nuclear weapon ... We haven't seen that yet. We hope we will," he said.
Iran's foreign ministry spokesperson had an hour earlier posted a statement on social media calling on the US to negotiate with "seriousness and good faith".
He said the Strait of Hormuz, the nuclear issue, war reparations, sanctions, and a permanent end to the war across the region were discussed.
The talks in Islamabad were the first direct US-Iranian meeting in more than a decade and the highest-level discussions since the 1979 Islamic Revolution.
The ongoing deadlock raises the possibility of a collapse in the ceasefire and the continued closure of the Strait of Hormuz, a chokepoint for about 20 percent of global energy supplies that Iran has blocked since the war began. The conflict has sent global oil prices soaring and killed thousands of people.
The Iranian delegation arrived on Friday dressed in black in mourning for late Supreme Leader Ayatollah Ali Khamenei and others killed in the war. They carried shoes and bags of some of the students killed during the bombing of a school early in the war, which is thought to have been carried out by the US.
"There were mood swings from the two sides and the temperature went up and down during the meeting," another Pakistani source said in reference to the first round of talks.
For the US-Iran talks, Islamabad, a city of more than 2 million people, was locked down with thousands of paramilitary personnel and army troops on the streets. Pakistan's mediating role is a remarkable transformation for a nation that was a diplomatic outcast a year ago.
Strait of Hormuz
As the talks started, the US military said it was "setting the conditions" to start clearing the Strait of Hormuz.
The Strait of Hormuz is central to the ceasefire talks. The US military said two of its warships had passed through the strait and conditions were being set to clear mines, while Iran's state media denied any US ships had transited the waterway.
Before the talks began, a senior Iranian source told Reuters the US had agreed to release frozen assets in Qatar and other foreign banks. A US official denied agreeing to release the money.
As well as the release of assets abroad, Tehran is demanding control of the Strait of Hormuz, payment of war reparations and a ceasefire across the region including in Lebanon, according to Iranian state TV and officials.
Tehran also wants to collect transit fees in the Strait of Hormuz.
Trump's stated goals have shifted, but as a minimum he wants free passage for global shipping through the strait and the crippling of Iran's nuclear enrichment programme to ensure it cannot produce an atomic bomb.
US ally Israel, which joined the 28 February attacks on Iran that launched the war, has also been bombing Tehran-backed Hezbollah militants in Lebanon and says that conflict is not part of the Iran-US ceasefire.
(Reuters and TNA staff)