Iran has claimed the United States has agreed to release billions in frozen assets, but Washington has swiftly denied any such move as JD Vance holds high-stakes peace talks in Islamabad.

A senior Iranian source said the US had agreed to unfreeze funds held in Qatar and other foreign banks, describing it as a sign of Washington's 'seriousness' in negotiations. 

But a US official quickly rejected the claim, underlining the deep mistrust hanging over the talks. 

The source, speaking anonymously, said the move was one of Tehran's key demands and had been conveyed to the US side through messages. 

A second Iranian source claimed as much as $6billion could be released. 

Unfreezing the assets was also said to be directly linked to ensuring safe passage through the Strait of Hormuz, a critical global oil route expected to dominate negotiations.

According to Iranian state media, Tehran has already set out its 'red lines' for any deal, including guarantees over the Strait of Hormuz, the payment of war reparations, the release of blocked assets and a ceasefire across the wider region. 

The strategic waterway has become a central flashpoint, with Donald Trump claiming in a Truth Social post that 'massive numbers of completely empty oil tankers… are heading right now to the United States to load up.'

He also warned Iran against charging ships to pass through the Strait of Hormuz, which he said has seen the worst disruption to global energy supplies in history.

The apparent dispute comes as Vance leads the US delegation into what is being billed as the biggest test of his political career, alongside special envoy Steve Witkoff and Jared Kushner, dubbed the 'good team' by Donald Trump.

The talks mark the first such meeting since the war began more than a month ago.

As delegations arrived in Islamabad, the fragile ceasefire showed signs of strain. 

The Iranian side is being led by parliament speaker Mohammad Bagher Qalibaf, with both he and Vance holding separate talks with Pakistani Prime Minister Shehbaz Sharif. 

No direct US-Iran meeting had been confirmed by mid-afternoon.

The Pakistan-brokered truce still faces major hurdles, with Israel and Hezbollah continuing to exchange fire along southern Lebanon, and Tehran setting conditions before negotiations can begin.

Pakistan's foreign ministry said Foreign Minister Ishaq Dar, army chief Asim Munir and Interior Minister Mohsin Naqvi received the US delegation, adding that Dar praised Washington's commitment to securing a lasting peace.

Hours earlier, President Donald Trump wished Vance good luck. 'We'll find out what's going on. They're militarily defeated.'

In Islamabad, the streets of a normally bustling capital were deserted Saturday as security forces sealed roads ahead of the talks.

Speaking shortly before his departure to Pakistan from Joint Base Andrews in Maryland, Vance said of Iran: 'If they're gonna try to play us they're gonna find the negotiating team is not going to be that receptive.

'The president gave us some pretty clear guidelines.'

The Iranian delegation for the talks, which is slated to begin Saturday, arrived a few hours ahead of Vance. 

They sent Foreign Minister Abbas Araghchi, Ali Akbar Ahmadian, secretary of the Supreme National Defense Council, Iranian parliament speaker Mohammad Bagher Qalibaf Central Bank Governor Abdolnasser Hemmati, and several lawmakers. 

They were received at the airport by Pakistan's Foreign Minister Ishaq Dar and other senior Pakistani government officials.

Vance, who has long been skeptical of foreign military interventions and outspoken about the prospect of sending troops into open-ended conflicts, set off Friday to lead mediated talks with Iran in the Pakistani capital.

'If the Iranians are willing to negotiate in good faith, we're certainly willing to extend the open hand,' Vance told reporters before boarding Air Force Two to make his way to the talks.

But he added, 'If they're gonna try and play us, then they're gonna find that the negotiating team is not that receptive.' 

Vance's trip comes as a tenuous, temporary ceasefire appears to be on the precipice of collapsing. 

The chasm between Iran's public demands and those from the US and its partner Israel seems irreconcilable. 

And in the US, where Vance might ask voters in two years' time to make him the next president, there is growing political and economic pressure to wrap it up.

Iranian parliament speaker Mohammad Bagher Qalibaf said in a social media post that a ceasefire in Lebanon, where Israel is targeting Iran-backed Hezbollah militants, and the release of blocked Iranian assets 'must be fulfilled before negotiations begin.' 

He did not elaborate further.

Qalibaf and other senior Iranian officials arrived in Islamabad, Pakistan, later on Friday ahead of Vance. 

Trump said he wished his Vice President 'good luck' before leaving when speaking to the press Friday. 

'I wished him luck. He's got a big thing. We'll find out what's going on. They're militarily defeated,' Trump said as he boarded Air Force One Friday.

Trump also said he would not allow Iran to impose tolls on the Strait of Hormuz.

'It's international water. If they're doing that, nobody knows if they're doing that, but if they're doing that, we're not going to let that happen,' he said. 

Trump added that the Strait will 'open up automatically,' despite the fact that limited traffic has been able to pass through the critical trade route since the temporary ceasefire was called earlier this week. 

'The strait will open up. If we just left the strait, otherwise they make no money. So the strait is going to open,' Trump said. He added that the US doesn't use the Strait, so 'other countries' will 'help out.'

'It won't be easy. It won't be, I would say this, we will have that open fairly soon,' the president said.

He insisted that he doesn't 'need a backup plan' and asserted that his administration would 'open up the Gulf with or without them,' referring to the Iranians, who have effectively shuttered the critical waterway.

The Athens-based Marine Traffic said on Friday that only 14 vessels, half of which were laden, have crossed the Strait of Hormuz since a ceasefire was declared on April 8, according to a statement on X.

Vessels exiting the Persian Gulf accounted for 70 percent of all crossings.

'Sanctioned or shadow-fleet-linked vessels accounted for nearly two-thirds of all crossings,' added the statement.

Before the conflict, over 100 ships passed through the Strait each day — many carrying oil to Asia.

The President expressed optimism in the three men he'd sent to Islamabad to try and end the conflict.  

'We'll see how it turns out. So it's JD and Steve and Jared. We have a good team, and they meet tomorrow. We'll see how it all works out.'

Trump also noted that these talks would be tense but he believes his men will get the job done.  

'It won't be easy. It won't be, I would say this, we will have that open fairly soon,' he said. 

Pakistan's government has set up a state-of-the-art media center to facilitate Pakistani and foreign journalists covering the talks between the United States and Iran, Information Minister Attaullah Tarar said.

Tarar told reporters the facility at the Jinnah Convention Center offers high-speed internet and a range of free services to support media coverage. 

Shuttle services have been arranged to transport journalists between the media center and a hotel in the city's main shopping mall.

Pakistan has announced visa-on-arrival for journalists and official delegations traveling from the United States and Iran for the talks, which have been dubbed the 'Islamabad talks.'

Inside the media center, rows of workstations equipped with laptops and charging points allow reporters to file stories. 

Large screens broadcast major domestic and international television channels. The facility also has designated areas for live stand-ups, press briefings and interviews.

The streets of Pakistan's capital were deserted Saturday as security forces sealed roads ahead of talks between high-level officials from Iran and the U.S. to end their nearly six-week war. 

Pakistani authorities urged Islamabad residents to stay inside, leading the city to look like it was under curfew.

Pakistan has sent fighter jets and other military forces to Saudi Arabia to boost security under a defence pact between the two countries, the Saudi defence ministry said on Saturday.

The deployment follows a wave of Iranian talks on the Gulf kingdom over the past weeks that struck key energy infrastructure and killed a Saudi national.

Riyadh and Islamabad signed a mutual defence pact in September 2025, committing both sides to treat any aggression against either country as an attack on both. That significantly deepened a decades-old security partnership.

Saudi Arabia's defence ministry said in a statement that Pakistani fighter jets and support aircraft had arrived at the King Abdulaziz Air Base in the country's eastern province.

It comes as the Lebanese National News Agency reported multiple Israeli strikes early Saturday in southern Lebanon, killing at least three people.

The three were killed when an airstrike hit and destroyed a residential building in Maifadoun town in the southern province of Nabatiyeh, according to the agency.

Hezbollah, meanwhile, said it fired a barrage of rockets that targeted a military facility in northern Israel.