U.S.–Iran Ceasefire Under Severe Strain as Fighting Returns to the Persian Gulf, Threatening Regional Stability and Global Energy Markets
Not even three weeks into implementation, the Islamabad Memorandum of Understanding is under severe strain and at risk of collapse. A new round of military exchanges triggered by disputes in the Strait of Hormuz has placed the agreement under unprecedented pressure, although neither side has formally abandoned the memorandum and regional mediators continue working to preserve a diplomatic path. The renewed confrontation has expanded beyond maritime incidents to include U.S. airstrikes inside Iran, Iranian missile and drone attacks against U.S. military facilities, the reimposition of oil sanctions, and increasingly confrontational rhetoric from leaders on both sides. Together, a return to a broader regional conflict is nearer than ever, threatening global energy security, freedom of navigation, and the future of U.S.–Iran diplomacy.
Initial reports indicate that Iran is under attack for a second straight night, including expansions of strikes on Iran’s Chabahar port. U.S. Central Command (CENTCOM) has acknowledged responsibility for the strikes, stating “At the direction of the Commander in Chief, U.S. Central Command forces have started conducting additional strikes against Iran to further degrade their ability to threaten freedom of navigation in the Strait of Hormuz. The United States is holding Iran accountable for recent unjustified aggression against commercial shipping and civilian crews freely navigating a vital international waterway.”
Iranian retaliation is likely to follow.
.jpg){kind=link}
The immediate crisis began after three commercial vessels were reportedly attacked while transiting or approaching the Strait of Hormuz. According to maritime monitoring organizations and regional governments, the vessels included the Qatari LNG carrier Al Rekayyat, the Saudi tanker Wadiyan, and the Liberian-flagged tanker Cyprus Prosperity. Qatar and Saudi Arabia publicly attributed the attacks to Iran, while Tehran has denied responsibility. The International Maritime Organization (IMO) condemned the attacks, warning that thousands of civilian seafarers remain exposed to growing risks in one of the world’s busiest maritime corridors and calling for maximum restraint to protect international navigation.
The attacks have had an immediate impact on global shipping. Commercial tanker traffic through the Strait of Hormuz has fallen sharply as shipping companies reassess security risks. According to shipping analytics cited by international media, only a handful of tankers transited the Strait during the day, reflecting a dramatic slowdown in commercial traffic. While navigation has not completely stopped, the decline illustrates the growing reluctance of commercial operators to enter an increasingly volatile maritime environment.
Late Tuesday, the United States canceled a waiver allowing Iran to sell oil openly and launched one of its largest military operations against Iran since the ceasefire was announced. CENTCOM stated that American forces struck more than 80 military targets across southern Iran, including air-defense systems, command-and-control facilities, coastal radar installations, anti-ship missile sites, and dozens of IRGC fast attack boats positioned around the Strait of Hormuz. According to CENTCOM, the operation was intended to reduce Iran’s ability to threaten commercial shipping following what Washington described as attacks on international vessels. President Donald Trump later said that U.S. forces had destroyed 28 Iranian boats during the operation and warned that additional strikes could follow, although that specific figure has not been independently verified.
Iranian media simultaneously reported numerous explosions across Bandar Abbas, Sirik, Qeshm, Bushehr, and Mahshahr. Tasnim News Agency reported multiple explosions around Sirik, while IRNA confirmed repeated explosions in Bandar Abbas, Qeshm, and surrounding coastal areas. Iran’s Army later announced that eight members of its Air Force and Navy were killed during the strikes in Bandar Abbas and Bushehr, while the Islamic Revolutionary Guard Corps (IRGC) separately confirmed the death of one of its personnel near Mahshahr.
The revocation of the temporary sanctions waiver that had allowed Iran to resume limited oil exports under the memorandum of understanding is arguably just as consequential. The waiver had temporarily permitted Iran to export crude oil, petroleum products, and petrochemicals while repatriating foreign currency revenues through the Central Bank of Iran. Although originally expected to remain in place for two months, the U.S. Treasury shortened the arrangement following the attacks on commercial shipping, while allowing transactions already underway to conclude by July 17. U.S. officials described the agreement as performance-based, arguing that Iran would benefit economically only if it complied with its commitments and refrained from threatening international navigation.
Tehran strongly rejected Washington’s narrative, arguing that the United States - not Iran - had repeatedly violated the memorandum before the latest military exchanges. Deputy Foreign Minister Kazem Gharibabadi argued that revoking the temporary oil-export waiver constituted a “flagrant violation” of Article 10 of the agreement, while the U.S. military strikes represented serious violations of Articles 1 and 2. He further asserted that continued Israeli military operations in Lebanon, supported by Washington, together with repeated American threats against Iran, had already breached the agreement several times during the preceding weeks. Iran’s Foreign Ministry similarly condemned the restoration of oil sanctions as evidence of “bad faith, instability, and the unreliability of the U.S. government,” warning that Washington would bear responsibility for the consequences of repeatedly violating the memorandum.
Parliament Speaker and Iran’s lead negotiator Mohammad Baqer Qalibaf delivered one of Tehran’s strongest political responses, declaring that “the era of bullying and extortion is over” and insisting that “we do not back down, and we do not retreat.” Qalibaf - who has been criticized by some hardliners for his role in brokering the agreement - argued that the United States had violated the memorandum by interfering with Iran’s maritime arrangements in the Strait of Hormuz, restoring oil sanctions, launching military strikes against southern Iran, and allowing continued Israeli military operations in Lebanon. According to Qalibaf, these actions demonstrated that Washington expected Iran to continue implementing the agreement while abandoning its own obligations. He therefore portrayed Iran’s military actions as responses to repeated American violations rather than the initial escalation.
President Masoud Pezeshkian echoed this position. In a statement posted on X, he accused the United States of continuing its longstanding policy of “breaking the rules, bullying competitors, creating obstacles, and cheating,” adding that Iran “will not accept such behavior and will firmly defend its rights.” His statement framed Iran’s military response as an act of national self-defense rather than an attempt to widen the conflict.
The dispute over the Strait of Hormuz has become the central issue underlying the renewed confrontation. Iranian officials argue that the memorandum recognized Tehran’s authority to manage future navigation arrangements through the Strait and maintain maritime safety. According to Iran, commercial vessels should use the Iranian-designated shipping corridor, while ships using alternative routes near Oman or disabling or manipulating their Automatic Identification System (AIS) transponders create navigational hazards and undermine agreed maritime arrangements. After Oman discussed establishing a temporary alternative shipping corridor, seemingly at the behest of Washington, Iranian officials warned that only the Iranian-designated route should be considered safe, indicating that vessels ignoring those arrangements could face enforcement measures.
As tensions escalated further, Iranian officials and state media issued increasingly forceful warnings regarding Tehran’s future response. Iranian media, citing informed security sources, reported that Iran had adopted a new military doctrine under which any future U.S. strike would immediately trigger the complete closure of the Strait of Hormuz and retaliation against at least two enemy targets for every Iranian target struck. Iranian military officials also warned that any country assisting future U.S. military operations against Iran could itself become a legitimate military target. Separately, Ebrahim Rezaei, spokesperson for the Iranian Parliament’s National Security and Foreign Policy Commission, said that withdrawing from the Nuclear Non-Proliferation Treaty (NPT) and reconsidering Iran’s nuclear doctrine could be considered if Iran faced what officials described as an existential threat following another U.S. attack. He added that Iran would respond to any renewed U.S. military action “with all its capabilities.”
Iran subsequently announced missile and drone strikes against 85 U.S.-related military targets in Bahrain and Kuwait Tuesday evening, including facilities associated with the U.S. Fifth Fleet, Port Salman, and Ali Al Salem Air Base. Kuwait reported intercepting ballistic missiles and drones, while Bahrain activated air-raid warning systems. Iran also claimed to have shot down an American MQ-9 Reaper drone, although the full extent of damage remains unconfirmed.
President Donald Trump delivered mixed signals about the future of the conflict. Speaking earlier today, President Trump warned that the United States was prepared to conduct additional strikes against Iran if necessary and stating that he no longer wished to negotiate with Tehran, he also said he did not expect the war to resume on a prolonged basis, telling reporters that “I don’t think the war is going to start again” and that “whatever happens will happen very quickly.” At the same time, U.S. officials indicated that additional military operations against Iranian targets remain under consideration should hostilities continue.
The confrontation has also strained relations between Iran and several Gulf states. Qatar summoned Iran’s chargé d’affaires and delivered a formal diplomatic protest after its LNG carrier was targeted, describing the incident as a serious violation of international maritime safety, a direct threat to global energy security, and a clear breach of international law. Saudi Arabia similarly condemned the reported attack on its tanker. Iran responded by urging Qatar not to take actions inconsistent with the memorandum while insisting that Tehran remained committed to ensuring maritime safety under navigation arrangements coordinated with Iran.
Financial markets reacted immediately to the renewed conflict. Brent crude oil prices rose by more than 5 percent, while major U.S. stock indexes declined and European markets experienced sharp losses. Because roughly one-fifth of global oil and LNG trade passes through the Strait of Hormuz, even limited disruptions immediately affect global energy prices, shipping costs, insurance premiums, and financial markets.
The latest escalation has placed the ceasefire framework under extraordinary pressure, but it has not necessarily eliminated the possibility of diplomacy. Washington and Tehran continue to accuse one another of violating the memorandum, yet both also frame their military and economic actions as responses to the other side’s alleged breaches, rather than formally withdrawing from the agreement itself. Meanwhile, regional mediators—including Qatar and other countries involved in facilitating the original understanding—continue efforts to prevent the current crisis from evolving into a sustained regional war. Whether the ceasefire can ultimately survive will likely depend on whether both sides choose continued military escalation or return to negotiations in the days ahead. For now, protecting civilian shipping, preserving freedom of navigation, avoiding direct confrontation between U.S. and Iranian forces, and sustaining diplomatic engagement remain essential to preventing a wider and potentially far more destructive regional conflict.