The U.S. and Iran are considering a two-week ceasefire extension to allow more time to negotiate a peace deal, according to a person familiar with the matter, reducing the risk of a resumption of fighting despite an intensifying standoff over the Strait of Hormuz.

With the initial truce due to expire next week, mediators between the warring sides are seeking technical talks to overcome the most contentious issues preventing a longer-term agreement, said the person, who asked not to be identified discussing sensitive matters. Those include the reopening of Hormuz and the future of Iran’s nuclear program.

Tensions remain particularly high over Hormuz, a critical waterway for oil and gas that’s been effectively shuttered since the start of the war almost seven weeks ago. The U.S. has set up a naval blockade to cut off Iranian shipments, and said Wednesday that 10 vessels have been forced to turn around. Tehran is keeping the strait closed to most other traffic.

The standoff has reduced transit to a trickle, exacerbating an energy supply crisis that threatens a major blow to the world economy.

Fighting between the U.S. and Iran has been on hold since about April 8, shortly after a two-week ceasefire was announced by President Donald Trump the previous evening. An initial round of peace talks was held in Pakistan last weekend, though participants including U.S. Vice President JD Vance departed without a deal.

The U.S. hasn’t “formally requested an extension of the ceasefire,” White House Press Secretary Karoline Leavitt told reporters Wednesday, but acknowledged “we remain very much engaged in these negotiations.”

Stocks hit record

Pakistan’s military said a delegation from the country arrived in Iran on Wednesday, with Islamabad continuing to mediate the exchange of messages between the two sides.

Iran sees a prolonging of the U.S. blockade as “a prelude to a breach of the ceasefire,” said Ali Abdollahi, the commander of Iran’s joint military headquarters, according to state TV. Iran’s armed forces “will not permit any exports or imports to continue in the Persian Gulf, the Sea of Oman or the Red Sea” if the blockade continues, he said.

Oil prices remain elevated, though Brent crude pared gains to trade at around $95 barrel on Wednesday. That’s about 33% higher than before the start of the war. U.S. stocks closed at a record high, boosted by optimism over a peace deal.

While Israel joined the U.S. in halting attacks on Iran last week, its military has kept up the campaign against Tehran-backed Hezbollah in Lebanon, a move that has complicated the broader push for peace.

Prime Minister Benjamin Netanyahu said late Wednesday that he told the Israeli military — which invaded Lebanon last month — to expand the buffer zone it’s seeking to establish inside the country.

Discussions are taking place about a potential ceasefire, Israel’s state-owned Kan News reported earlier Wednesday, citing an unnamed official, adding that a decision hasn’t been made.

The U.S. had been pressing Israel to agree to a truce, Israel’s Channel 12 reported, with Iran arguing that the ongoing campaign is a breach of the ceasefire. Talks between Israel and the government in Beirut — which has little sway over Hezbollah — began Tuesday in Washington to address the conflict, which has killed more than 2,000 people and displaced a million more, according to Lebanese authorities.

Those negotiations aren’t linked to the U.S.-Iran talks, according to a senior American official. The U.S. wants to see a durable peace in Lebanon but did not demand an immediate ceasefire, the official said.

‘Close to over’

Trump on Tuesday told Fox Business the war is “close to over.” The U.S. leader has vacillated throughout the conflict between declaring it all but won and threatening a major escalation, and many questions remain about the issues that drove the U.S. and Israel to start their bombardment of the Islamic Republic.

Chief among those is the future of Iran’s nuclear program. Israel maintains Tehran’s stockpile of highly enriched uranium must be removed, while Trump told the New York Post he’s unhappy about reports that the U.S. proposed a two-decade moratorium on enrichment, saying Iran can never be allowed to have nuclear weapons.

The whereabouts of Iran’s uranium has been unknown since the U.S. and Israel bombed the country’s nuclear facilities in June last year, and International Atomic Energy Agency inspectors have been barred access since then.

Iran has always said it isn’t pursuing a weapons program. The country’s right to peaceful use of nuclear energy “cannot be revoked,” Foreign Ministry spokesman Esmail Baghaei told reporters on Wednesday. However, the level and type of enrichment is “negotiable,” he added.

Trump pulled out of a global accord to limit Iran’s nuclear program during his first term. In the past year his envoys held several rounds of meetings with Iranian counterparts to discuss a potential replacement. In February, Iran made offers that went beyond the 2015 accord, according to Omani officials mediating those talks — which were broken off when the US and Israel attacked Iran on Feb. 28.

John Kerry, who as secretary of state in the Obama administration was a key player in Iran nuclear negotiations in the 2010s, told Bloomberg TV that Trump’s blockade could be a “smart decision” to pressure Iran.

“But not unless you are prepared to have a compromise of some kind on the far end,” he said in an interview with Francine Lacqua. From an Iranian perspective, Kerry said, “they’d love it if people who make an agreement with them were to keep the agreement. And that’s part of their fear here, that there is no trust.”

Even in the event of a deal, it may take time to restore energy flows from the Gulf — adding to fears of a global inflation crisis.

Surging prices of products such as jet fuel and gasoline are already squeezing consumers, the International Energy Agency said Tuesday. There are also growing concerns about disruption of other Gulf supplies besides energy — in particular fertilizer, where shortages could hurt food output and raise prices.

The United Nations is ready to set up a corridor to allow fertilizer to move freely through Hormuz and reach farmers in time for the planting season, though it hinges on reaching a political agreement, according to a top U.N. official.

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(With assistance from Patrick Sykes and Jeff Mason.)

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