Diplomatic optimism gained ground on Thursday as mediators stepped up shuttle diplomacy to defuse Middle East tensions and arrange new negotiations between the United States and Iran after nearly seven weeks of war. Yet deep mistrust persisted, with Tehran issuing a stark warning to shut down Red Sea trade if Washington fails to lift its naval blockade of Iranian ports.

Iran and the US and were weighing a return to Pakistan for further talks as early as next weekend, media reported, after last week's negotiations ended without a breakthrough. A high-level Pakistani delegation led by army chief Asim Munir arrived in Tehran on Wednesday to deliver a US message to Iranian leaders, Iran's Press TV reported.

With the ceasefire set to expire next Tuesday, a senior Iranian source told Reuters that Munir — who mediated the last round of talks — aimed to "narrow gaps" between the two sides. Iranian Foreign Minister Abbas Araqchi received Munir and reaffirmed Tehran's commitment to "promote peace and stability in the region".

But no dates have been finalized for the next round, and consultations continue to agree on a mutually acceptable schedule, a Pakistani Foreign Ministry spokesman said on Thursday.

Mediators are pushing for a compromise on three core sticking points that derailed last weekend's direct talks — Iran's nuclear program, the Strait of Hormuz and wartime compensation claims, according to multiple diplomatic sources.

Separately on Wednesday, Pakistani Prime Minister Shehbaz Sharif traveled to Saudi Arabia as part of a regional tour that also includes Qatar and Turkiye, under a "double-pronged strategy", Al Jazeera reported.

"Pakistan wants to hold everyone together without upsetting any party," said retired Pakistani military official Tughral Yamin.

"It wants to play a role in the evolving security architecture by assuring that their overtures are not against anyone's threat perceptions."

The diplomatic push was given a lift by optimistic remarks by Iranian President Masoud Pezeshkian, who said on Wednesday that Tehran supports "constructive dialogue" with the US, but will not be "forced into submission".

White House Press Secretary Karoline Leavitt also struck a positive tone, saying future talks were likely to again be held in Islamabad. However, she added that "at this moment" there had been no extension of the current ceasefire with Iran.

The fragile ceasefire hung in the balance as Washington pressed ahead with the port blockade to ramp up pressure on Tehran. The US imposed fresh sanctions on Iran's oil industry on Wednesday, with Treasury Secretary Scott Bessent vowing to target "regime elites" and escalate economic pressure.

In a sharp retaliatory warning, Ali Abdollahi, commander of Iran's joint military command, threatened to halt regional trade if the US does not lift the blockade.

"Unless Washington relents, Iran's armed forces will not allow any exports or imports to continue in the Persian Gulf, Sea of Oman and Red Sea," he said.

Regional stock markets have rallied sharply in recent days amid hopes of a quick end to the fighting, with Wall Street indexes hitting record highs on Wednesday as crude oil prices stabilized.

"While there are hopes for de-escalation, many investors remain skeptical, given that US-Iran talks have repeatedly broken down even after appearing to make progress," said Toshitaka Tazawa, an analyst at Fujitomi Securities.

The conflict, launched by the US and Israel on Feb 28, has killed more than 3,000 people in Iran and triggered retaliatory strikes on US targets in Gulf states. It has also reignited Israel-Hezbollah clashes in Lebanon, where Israeli forces have killed over 2,000 people since March 2.

War damage to Iran's economy has reached $270 billion in 40 days, equivalent to roughly $3,000 per person, according to official figures, with losses expected to grow as trade disruptions deepen under the US blockade of Iranian ports, Press TV reported on Wednesday. Iran's central bank has warned that rebuilding the economy could take more than a decade.

In another, tentative, positive sign, the United Arab Emirates' Ministry of Education announced regular in-person classes will resume across all nurseries, kindergartens, public and private schools from Monday.