Iran is using its control over the Strait of Hormuz as a bargaining chip in peace talks with the US. The strategic importance of the strait raises the possibility of military responses, including potential UK warship deployments. While the market prices in a low probability of talks collapsing, tensions could sharply change based on statements from key figures.
The US has firmly maintained sanctions, refusing to release frozen Iranian assets despite demands. Talks in Islamabad collapsed as Iran's demands—halting attacks on Lebanon and returning funds—were unmet. The US is employing a dual strategy of diplomatic engagement alongside military pressure, using sanctions as a core leverage tool.