CAIRO (AP) — Pakistan's army chief met Wednesday in Tehran with Iran's foreign minister in the latest diplomatic move to ease tensions in the Middle East and arrange a second round of negotiations between the United States and Iran after almost seven weeks of war.

The White House said any further talks would likely take place in the Pakistani capital of Islamabad, though no decision had been made on whether to resume negotiations.

WATCH: With U.S.-Iran ceasefire expiring in a week, diplomats lay groundwork for new talks

The U.S. naval blockade of Iranian ports continued as the Trump administration warned it would ramp up economic pain on Iran with new economic sanctions on countries doing business with it, calling the move the "financial equivalent" of a bombing campaign.

Pakistan has emerged as a key mediator after it hosted direct talks between the U.S. and Iran in Islamabad that authorities said helped narrow differences between the two sides. Mediators are seeking a new round before the ceasefire expires next week.

Officials say U.S. and Iran are making progress

Even as the U.S. blockade on Iranian ports and renewed Iranian threats strained the ceasefire agreement, regional officials reported progress, telling The Associated Press the United States and Iran had an "in principle agreement" to extend it to allow for more diplomacy. They spoke on condition of anonymity to discuss the matter.

WATCH: U.S. begins Strait of Hormuz naval blockade after Iran peace talks fail

Iran's foreign minister, Abbas Araghchi, took part in a preliminary meeting with Asim Munir, Pakistan's army chief of staff, Iranian state media reported. It said talks would continue Thursday.

But even as mediators worked for peace, tensions simmered.

The commander of Iran's joint military command, Ali Abdollahi, threatened to halt trade in the region if the U.S. does not lift its naval blockade.

And a newly-appointed military adviser to Iranian Supreme Leader Mojtaba Khamenei said he doesn't support extending the ceasefire.

Iranian state media quoted Mohsen Rezaei, a former commander in the Iranian Revolutionary Guard, as saying: "Unlike the Americans who are afraid of continuous war, we are fully prepared and familiar with a long war."

U.S. Treasury Secretary Scott Bessent said the White House has warned countries and private companies they could face sanctions for doing business with Tehran.

White House press secretary Karoline Leavitt said the U.S. had not "formally requested an extension of the ceasefire" with Iran, which is set to expire Tuesday.

"At this moment, we remain very much engaged in these negotiations, in these talks," Leavitt said, adding that any further in-person talks "would very likely" return to Islamabad.

Mediators seek compromise on sticking points

Mediators are pushing for a compromise on three main sticking points that derailed direct talks last weekend — Iran's nuclear program, the Strait of Hormuz and compensation for wartime damages, according to a regional official involved in the mediation efforts.

Iranian Foreign Ministry spokesman Esmail Baghaei said Iran is open to discussing the type and level of its uranium enrichment, but his country "based on its needs, must be able to continue enrichment," Iranian state media reported.

The negotiating team led by Vice President JD Vance urged Iran to agree to a 20-year moratorium on uranium enrichment as part of a potential deal to end the war, according to the regional official and a person briefed on the matter.

The Iranians countered with an offer to suspend enrichment for five years, said the officials, who spoke on condition of anonymity because they were not authorized to comment publicly on the negotiations.

The White House rejected that. The dueling proposals were first reported by The New York Times.

The fighting has killed at least 3,000 people in Iran, more than 2,100 in Lebanon, 23 in Israel and more than a dozen in Gulf Arab states. Thirteen U.S. service members have also been killed.

Trump says Iran wants a deal

The war has jolted markets and rattled the global economy as shipping has been cut off and airstrikes have torn through military and civilian infrastructure across the region. Oil prices have fallen amid hopes for an end to fighting, and U.S. stocks on Wednesday surpassed records set in January.

Yet the future of the fragile ceasefire still hung in the balance as the U.S. pressed ahead with its blockade, which threatens to sever Iran from economic lifelines.

"I think they want to make a deal very badly," U.S. President Donald Trump said in an interview Wednesday on Fox Business Network's "Mornings with Maria."

In a social media post, Trump said China has agreed not to provide weapons to Iran as reports circulated that Beijing has considered transferring arms.

China has long supported Iran's ballistic missile program and backed it with dual-use industrial components that can be used for missile production, according to the U.S. government.

U.S. military says no ships got past blockade

U.S. Central Command said Wednesday that no ships had made it past the blockade since it was imposed two days earlier, while 10 merchant vessels complied with direction from U.S. forces to turn around and reenter Iranian waters.

The blockade is intended to pressure Iran, which has exported millions of barrels of oil, mostly to Asia, since the war began Feb. 28. Much of it has likely been carried by so-called dark transits that evade sanctions and oversight, providing cash that's been vital to keeping Iran running.

Since the war began, Iran has curtailed maritime traffic through the Strait of Hormuz, which a fifth of global oil transited through in peacetime. Tehran's effective closure of the strait sent oil prices skyrocketing, raising the cost of fuel, food and other basic goods far beyond the Middle East.

Strikes continue in Lebanon after Washington talks

Meanwhile, Israel pressed ahead with its aerial and ground war in Lebanon. The country's National News Agency reported airstrikes and artillery shelling throughout southern Lebanon on Wednesday, including near Bint Jbeil, where Israeli forces have encircled Hezbollah fighters.

Israeli Prime Minister Benjamin Netanyahu said Israeli troops were about to "eliminate this great stronghold of Hezbollah" and would continue expanding control of areas in southern Lebanon.

The fighting continued after Israeli and Lebanese officials concluded their first direct talks in decades. Netanyahu said negotiations are continuing, with disarming Hezbollah a key goal.

The Lebanese Health Ministry said Israel struck three teams of paramedics Wednesday in southern Lebanon, first hitting one team and then two more that rushed to help. The attacks killed three paramedics and wounded six others, the ministry said.

The Israeli military did not immediately respond to a request for comment.

Israel and Lebanon have technically been at war since Israel was established in 1948, and Lebanon remains deeply divided over diplomatic engagement with Israel.

Metz reported from Ramallah, West Bank, Ahmed from Islamabad and Corder from The Hague, Netherlands. Associated Press writers Darlene Superville, Aamer Madhani and Joshua Boak in Washington; Julia Frankel in New York and Russ Bynum in Savannah, Georgia, contributed to this report.