Tehran’s decision comes after the US Navy halted an Iranian-flagged cargo vessel near the Strait of Hormuz on Sunday, in what was the first interception since Washington instated its naval blockade of Iranian ports.
Iran says it will not be sending a delegation to participate in the second round of high-stakes peace talks with the United States in the Pakistani capital Islamabad, set to take place on Monday.
It comes after the US attacked and seized an Iranian-flagged cargo vessel it said had tried to evade its naval blockade near the Strait of Hormuz on Sunday.
Washington said it was deploying a negotiating team, chaired by Vice President JD Vance, to Islamabad to engage in efforts aimed at bridging gaps and reaching a comprehensive agreement to end the hostilities.
It is not yet clear whether the talks will proceed as planned without Iranian presence or whether the US will also withdraw.
Tehran’s joint military command vowed to respond, throwing the fate of a fragile ceasefire into question days before it expires.
The ship was the first to be intercepted by the US Navy since it began blockading Iranian ports last week in response to Tehran’s closure of the strategic waterway since the US-Israeli war on the country broke out on 28 February.
Iran says the armed boarding of the cargo vessel constituted a violation of the fragile truce and an “act of piracy”.
US President Donald Trump, in a post on social media, said a US Navy guided missile destroyer in the Gulf of Oman warned the Iranian-flagged ship, the Touska, to halt and then “stopped them right in their tracks by blowing a hole in the engine room."
US Marines had custody of the US-sanctioned vessel and were “seeing what’s on board!” It was not clear whether anyone was hurt. The US Central Command, which didn't answer questions, said the destroyer had issued “repeated warnings over a six-hour period.”
The development again sent oil prices spiralling, deepening an already dire global energy price crisis, one of the worst in decades.
Brent crude, the international standard, opened trading at $95 a barrel early on Monday, a hike from its price, which hovered between $91 and $92 during the majority of the ceasefire.
The move has heightened uncertainty over the fate of the war, which Trump had claimed repeatedly over the last few days was “close to over”, but now brings his earlier statement on new talks with Iran in Pakistan to question.
Minutes after the ship seizure was announced, Iranian state media reported on President Masoud Pezeshkian’s phone conversation with Pakistan's Prime Minister Shehbaz Sharif earlier on Sunday.
US actions, including bullying and unreasonable behaviour, have led to increased suspicion that Washington will repeat previous patterns and “betray diplomacy," the reports cited Pezeshkian as saying.
Two previous attempts at talks — last June and earlier this year — were interrupted by Israeli and US attacks.
On another phone call, Iranian Foreign Minister Abbas Araghchi told his Pakistani counterpart, Ishaq Dar, that recent US actions, rhetoric and contradictions were signs of “bad intentions and lack of seriousness in diplomacy," Iran’s state broadcaster said.
Pakistan did not confirm a second round of talks, but authorities had begun tightening security in Islamabad. A regional official involved in the efforts said mediators were finalising preparations and US advance security teams were on the ground.
Iran on Saturday said it had received new proposals from the United States. While Iran’s chief negotiator, parliament speaker Mohammed Bagher Ghalibaf said “there will be no retreat in the field of diplomacy,” he acknowledged a wide gap remained between the sides.
It was unclear whether either side had shifted stances on issues that derailed the last round of negotiations, including Iran’s nuclear enrichment program, its regional proxies and the Strait of Hormuz.
Trump's announcement on talks repeated his threats against Iranian infrastructure that have drawn widespread criticism and warnings of war crimes. If Iran doesn't agree to the US-proposed deal, "the United States is going to knock out every single power plant, and every single bridge, in Iran,” wrote the US president.
Iran earlier on Monday warned it could keep up the global economic pain as ships remained unable to transit the strait, with hundreds of vessels waiting at each end for clearance.
“The choice is clear: either a free oil market for all, or the risk of significant costs for everyone,” Mohammad Reza Aref, first vice president of Iran, said in a social media post calling for a lasting end to military and economic pressure on Tehran.
Roughly one-fifth of the world’s oil trade normally passes through the strait, along with critical supplies of fertiliser for the world's farmers, natural gas, and humanitarian aid for places in dire need, such as Afghanistan and Sudan.