Vance boarded Air Force Two at approximately 05:40 UTC Sunday Islamabad time giving a thumbs-up to press cameras, confirming the departure. His four-minute press conference positioned the failure squarely on Iran: "Iran has chosen not to accept our terms." He said the US needed "an affirmative commitment that they will not seek a nuclear weapon and will not seek the tools that would enable them to quickly achieve a nuclear weapon. We haven't seen that yet." Vance said he had spoken with Trump up to a dozen times during the 21-hour session, and also with Secretary of State Rubio, Treasury Secretary Bessent and CENTCOM commander Adm. Brad Cooper. He described the US offer as its "final and best offer" and said the ball was in Iran's court. Iran's Parliament Speaker Ghalibaf responded on X: "Before the negotiations, I emphasized that we have the necessary good faith and will, but due to the experiences of the two previous wars, we have no trust in the opposing side. My colleagues raised forward-looking initiatives, but the opposing side ultimately failed to gain the trust of the Iranian delegation in this round of negotiations." Iran's Foreign Ministry spokesman said "it is natural that we shouldn't have expected to reach agreement in just one session" and characterised the atmosphere as one of deep mistrust. Semi-official Tasnim cited "excessive US demands" as the cause. Iranian sources outlined Tehran's four standing conditions for a permanent deal: full sovereignty over the Strait of Hormuz including the right to charge transit fees, payment of war reparations by the US-Israeli coalition, release of frozen assets (including $6 billion previously held in Qatar under a prior agreement), and a mandatory extension of the ceasefire to Lebanon. Araghchi, in his first official post-Islamabad remarks on Monday, described the negotiations as "the most intensive engagement between the two countries in 47 years." Iran stated it remained open to further negotiations but set no timeline. Pakistan FM Dar urged both sides to uphold the ceasefire: "It is imperative that the parties continue to uphold their commitment to ceasefire." Oman's FM Busaidi called for the ceasefire to be extended and talks to continue, saying "success may require everyone to make painful concessions."

Several hours after Vance's departure from Islamabad, President Trump announced the most significant military escalation since the ceasefire: the US would immediately begin a naval blockade of the Strait of Hormuz targeting Iranian ports. Trump told Fox News' Maria Bartiromo: "It's going to be all or none," referring to Iran's practice of allowing selective passage to China and India while blocking others or charging tolls of up to $2 million per transit. Trump said the US would stop ships that had paid Iran's toll. CENTCOM formally confirmed in a statement posted to X: "The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman." CENTCOM specified that ships not travelling to or from Iranian ports would be able to pass freely through Hormuz - framing the blockade as targeting Iranian trade rather than closing the strait entirely. CENTCOM advised all mariners to monitor advisory broadcasts and contact US naval forces when operating in the Gulf of Oman and Strait of Hormuz approaches. The IRGC Navy responded with immediate escalation: "All traffic is under the full control of the armed forces. The enemy will become trapped in a deadly vortex in the Strait if it makes the wrong move," the IRGC posted on X, including video footage of vessels in targeting crosshairs. In a separate statement, the IRGC maintained the strait was "open to the harmless passage of civilian vessels in compliance with specific relevant regulations." Security analyst Andreas Krieg of King's College London called the blockade plan "unrealistic": "We should bear in mind that the Americans have a much lower threshold of pain than the Iranians. The Iranians, whatever happens, can sustain this for far longer than the world economy, far longer than the Gulf states, far longer than the Americans." Trump downplayed the talks outcome separately, saying: "We're sweeping the strait. Whether we make a deal or not makes no difference to me." Trump had been discussing the blockade option as a contingency for several days per Axios.

The competing narratives over Saturday's USS Peterson and Murphy transit continued into Sunday. The US maintained both destroyers completed the full transit; Iranian state media maintained at least one vessel turned back after IRGC warning. MarineTraffic independently detected the USS Murphy briefly transmitting AIS in the strait, while the Peterson was not detected - consistent with the ships using electronic silence for portions of the transit. Separately, by Sunday morning 16 ships had transited Hormuz - the busiest single day since the ceasefire announcement - including three crude oil vessels (flagged under China, Hong Kong and Liberia) that MarineTraffic confirmed passed through. The IRGC stated all Hormuz traffic remained under Iranian armed forces control and that only civilian vessels in compliance with Iranian regulations would be permitted. Qatar's announcement that full maritime navigation would resume at 6am Sunday appeared to materialise, driving the 16-ship figure. Trump separately posted that US forces had destroyed "all 28" of Iran's mine-laying boats - Iran called the claim "fake news." Analysis from House of Saud military reporting noted a destroyer drawing 31 feet can transit a mined strait at acceptable risk; a fully laden VLCC drawing 72 feet cannot - meaning the destroyer transit remained symbolic rather than operationally reopening the waterway for commercial tanker traffic.

Pakistan's Foreign Minister Ishaq Dar issued a formal public statement urging both Washington and Tehran to uphold the ceasefire despite the collapse of talks, characterising the 21-hour session as "intense and constructive" and pledging Pakistan would continue to facilitate dialogue. "Pakistan has been and will continue to play its role to facilitate engagement and dialogue between the Islamic Republic of Iran and the United States of America in the days to come," Dar stated. Oman's Foreign Minister Busaidi separately called for a ceasefire extension: "I urge that the ceasefire be extended and talks continue. Success may require everyone to make painful concessions, but this is nothing as compared to the pain of failure and war." Israel-Lebanon direct talks at the US State Department in Washington remained scheduled for Tuesday - the first direct meeting between Israeli and Lebanese ambassadors to Washington. Lebanon PM Nawaf Salam stated he was working to achieve an Israeli troop withdrawal and that Lebanon planned to demand Israeli withdrawal, release of Lebanese prisoners, and return of 1 million+ displaced civilians. Hezbollah supporters protested in Beirut calling the government too weak to end the war. Netanyahu said Israel was working to control an 8-10km buffer zone inside Lebanon south of the existing line. Netanyahu posted: "Our enemies - Iran and the Axis of Evil - they came to destroy us, and now they are simply fighting for their own survival." Iran's President Pezeshkian stated a deal was possible if the US "abandons its totalitarianism and respects the rights of the Iranian nation." Egyptian FM Badr Abdelatty separately called on Witkoff to prioritise "dialogue and peaceful solutions" in a call.

An Israeli drone struck a Lebanese Red Cross ambulance in the southern Lebanese town of Beit Yahoun killing paramedic Hassan Bedawi and wounding another emergency worker. The Lebanese Red Cross stated their personnel were "directly targeted" by the drone, and that prior to the mission "the necessary contacts had been made with UNIFIL to ensure protection and safe passage" - the ambulances and crews bearing the Red Cross emblem. The Red Cross strongly condemned the attack as "a continuation of clear and blatant violations of all provisions of international humanitarian law." The IDF did not immediately claim responsibility. Separately, the UN peacekeeping force UNIFIL reported an Israeli Merkava tank rammed UNIFIL vehicles in southern Lebanon twice on Sunday, causing significant damage to one vehicle; the IDF also fired warning shots in Bayada striking UNIFIL vehicles and spray-painted cameras at UNIFIL's Naqoura headquarters. At least 35 people were killed across Lebanon on Sunday according to Lebanese authorities - including the Red Cross paramedic and at least 5 killed in a strike on Qana including three women. Lebanon's cumulative death toll since March 2 reached 2,055 with 6,300+ wounded. Israeli strikes over the weekend hit more than 200 Hezbollah targets by IDF count. Israel's Finance Ministry released a preliminary war cost estimate: 35 billion shekels ($11.52 billion) in budgetary expenses, with 22 billion shekels going to defence - the estimate was added directly to the 2026 budget. Updated overall war casualty estimates: Iran 3,000-3,375 killed (Iranian state media/HRANA discrepancy); Lebanon 2,055 killed; Israel 23 civilians killed; US 13 service members KIA and 2 non-combat deaths; Gulf Arab states and other countries 12+ killed. At least 87 medical workers in Lebanon have been killed in Israeli strikes since March 2.