TRUMP'S ULTIMATUM | Vance declares 'final and best offer' after marathon 21-hour nuclear talks

Emerging from the historic direct negotiations, Vance told reporters the United States had exhausted its room to move, saying the proposal delivered to Iranian counterparts represented Washington's absolute limit.

"We leave here with a very simple proposal, a method of understanding that is our final and best offer," Vance said.

"We'll see if the Iranians accept it."

The vice president revealed the negotiating team had been in near-constant contact with President Donald Trump throughout the marathon session, speaking to him as many as a dozen times over the course of the talks.

"We were talking to the president consistently — I don't know how many times, a half dozen times, a dozen times over the past 21 hours," Vance said.

"We were constantly in communication with the team because we were negotiating in good faith."

Trump, for his part, struck a defiant tone from Washington, declaring the United States had already won regardless of how the negotiations conclude. The US President described the talks as "very deep" and suggested the outcome would fall in America's favour either way.

The talks in Islamabad represent a remarkable moment in diplomatic history — a direct, face-to-face negotiations between Washington and Tehran.

The two countries had spent decades in a state of mutual hostility and, more recently, open military confrontation.

The Strait of Hormuz is understood to be a central flashpoint in the negotiations, with Iran firmly asserting its authority over the waterway through which a significant portion of the world's oil supply flows.

Tehran has flatly denied US claims that two Iranian vessels transited the strait, and warned that any attempt by military ships to pass through without permission would be met with a "strong response."

Meanwhile, the conflict in Lebanon showed no sign of easing, with Israel continuing to strike targets in the south of the country.

At least 13 people were reported killed in an Israeli strike on the town of Tefahta.

The combination of the Islamabad talks, the Hormuz standoff and the ongoing strikes in Lebanon paints a picture of a Middle East teetering on a knife's edge — with the fate of a potential US-Iran agreement now resting entirely on whether Tehran accepts the offer Vance has placed before them.

The world, for now, is waiting.