Honduras on Tuesday suspended negotiations with Panama after a wave of political violence.
The move came as the United States and other world powers continue to push Panama to end its economic isolation by imposing economic sanctions on the Central American country.
The sanctions, announced in late November, are intended to halt the country’s reliance on Latin American oil.
“We have decided to suspend the negotiations until the political situation in Honduras is clarified,” Panama’s foreign ministry said in a statement.
It added that the government of Honduras is aware of the suspension and would comply with it.
In a separate statement, the country said it would continue to work with the U.S. on resolving the issue.
Honduras, which has been grappling with a decades-long political crisis that has seen several presidents elected in recent years, is the largest producer of oil in the Americas, but is struggling to regain lost revenues due to the high cost of producing and transporting it.