US denies $6 billion Iran asset thaw as Islamabad talks begin under cloud of uncertainty

The United States has denied reports that it agreed to unfreeze $6 billion in Iranian assets, casting doubt on a key claim that surfaced just as American and Iranian delegations convened in Islamabad for crucial ceasefire negotiations.

A US official on April 11 rejected a report by Reuters that Washington had approved the release of Iranian funds held in Qatar and other foreign banks. The report, citing senior Iranian sources, had suggested the move was part of a broader effort to advance a deal during the Pakistan talks.

According to the report, a second Iranian source claimed the US had agreed to release the $6 billion, with the decision allegedly tied to ensuring safe passage through the Strait of Hormuz—an issue expected to feature prominently in the negotiations. However, the US denial signals no such concession has been formally made.

High-stakes talks begin in Islamabad

Senior leaders from both sides have gathered in Islamabad to negotiate an end to their six-week conflict, though uncertainty looms over whether talks will proceed smoothly.

The US delegation, led by Vice President JD Vance, includes special envoy Steve Witkoff and Jared Kushner. The team arrived aboard US Air Force aircraft and was received by Pakistan Army chief Asim Munir and Foreign Minister Ishaq Dar.

Iran’s delegation, headed by Parliamentary Speaker Mohammad Baqer Qalibaf and Foreign Minister Abbas Araqchi, arrived a day earlier. The group is said to be in mourning following the death of Supreme Leader Ayatollah Ali Khamenei and other casualties from the conflict.

Tehran has already signalled potential roadblocks, indicating talks may not begin without firm commitments from Washington on sanctions relief and developments in Lebanon.

Funds frozen for years amid geopolitical tensions

The $6 billion in question has remained entangled in geopolitical tensions for years. Originally derived from Iranian oil exports to South Korea, the funds were frozen in 2018 after then-US President Donald Trump withdrew from the Iran nuclear deal and reimposed sanctions.

The money was later moved to Qatari accounts under a Doha-mediated prisoner swap agreement in September 2023, which secured the release of five American detainees in exchange for five Iranians held in the US.

Although the funds were briefly set to be accessible for humanitarian purposes—such as food, medicines, and agricultural imports—the Biden administration re-froze them following the October 7, 2023 Hamas-led attack on Israel, citing Iran’s links to the group.

US officials have consistently maintained that any access to the funds would be tightly controlled and limited strictly to humanitarian use, under Treasury oversight.

With Washington now denying any fresh move to release the money, the fate of the funds and their role in ongoing negotiations remains uncertain as both sides navigate a fragile diplomatic moment.