Talks break down as both sides play hardball - what happens next?

They talked for 21 hours. The highest-level meeting between the US and Iran since its revolutionary government came to power in the '70s.

But in the end it wasn't enough.

The Americans were the first to get out their version of events before getting on their plane and heading home.

The Iranians would not renounce their ambition to build the bomb and seeking the means to do so, said US Vice President JD Vance.

The Iranians say the Americans demanded they hand over their enriched uranium but also refused to accept their sovereignty over the Strait of Hormuz.

Iran war latest: Vance says peace talks with Iran have ended without a deal

If the Americans really did walk away over the nuclear issue, they came here on a naive assumption that the Iranians would cave on day one of talks.

The last time the West and Iran reached an agreement on the nuclear issue took almost two years of negotiations.

In reality, we know the main issue on the table was the strait and the stranglehold it has given the Iranians over the global economy.

"The US tried to achieve at the negotiating table what it could not achieve through war," they said in their leaving statement.

That is a pointed reminder that America has failed to achieve its aims through military force.

So what just happened?

Well, in Middle Eastern bazaar terms, this is the moment the buyer walks out of the shop saying the price is too high. Only in this case, both sides think they are the seller and in a position to dictate terms.

Iran is unlikely to come running after the Americans with a lower price if they think they have the upper hand.

That assumption will now be tested.

What happens next?

We are still in a ceasefire period, meant to last two weeks.

Diplomacy will continue through third-party mediators and back channels.

If it cannot make more progress than this historic diplomatic encounter in Islamabad, a return to war seems likely.

(c) Sky News 2026: Talks break down as both sides play hardball - what happens next?