Earlier, on June 17, President Trump formally signed the 14-point MoU, which ends the war as both sides commit to further talks over the next 60 days. It says that the pivotal Strait of Hormuz would reopen, Iran will never have a nuclear weapon, and also commits a $300bn fund for the "reconstruction and economic development" of the country, although the US does not have to contribute. It comes four months after the conflict between the countries - and Israel - broke out. The agreement has been described by the Trump administration as "performance-based", with Iran benefiting only if it follows its commitments. Initial US-Iran agreement leaves many key issues to be negotiated. The US also agreed to lift a military blockade on ships going to and from Iranian ports.

But the issue of Iran's nuclear program, the main reason cited by the US for the conflict, is still to be negotiated. In Trump's first term, he withdrew the US from an Obama-era nuclear deal with Iran and reimposed economic sanctions. [1]

Point 5 of the MoU deals with the  Strait of Hormuz. Part of the agreement notes that upon the signing of the MoU, Iran will "make arrangements using its best efforts" to allow safe passage of commercial vessels through the Strait of Hormuz, with no charge. This has been a significant aim of the US since the war began, and the Strait of Hormuz was shut, sending global oil prices spiking. The document notes that traffic will start flowing "immediately", considering the need to remove technical and military "obstacles" and conduct de-mining operations. The officials, in an earlier briefing, repeatedly made clear that vessels would not be charged for transit through the Strait of Hormuz. In the longer-term, the document notes that Iran will work with Oman and other Gulf states to set up a "broader" agreement on how to manage the Strait of Hormuz. The US believes that Iran will assert its rights "aggressively", but that the Gulf states would "never" accept a future in which there is a tolling system in place, the official said.[2]

There is some progress on this score. On June 21, some vessels appeared to be entering, exiting, and transiting the strait, according to location data on the maritime tracking website MarineTraffic, despite Iran's claim, disputed by the US, to have closed the strait.

Since the MoU was signed, there has been an upsurge in fighting between Hezbollah and Israeli forces in southern Lebanon, and Israeli air strikes that the health ministry says have killed dozens of Lebanese, including women and children.

That escalation led the US to declare a new ceasefire between Israel and Hezbollah earlier. Continued clashes and air strikes prompted Iran on June 20 to announce it had shut the Strait of Hormuz, though tracking data shows vessels have continued to pass through it.

Earlier, as the talks began in Switzerland, Trump posted that Iran "must immediately stop their highly paid PROXIES in Lebanon from causing trouble" and threatened to "hit Iran very hard again" if they did not.

Iran's lead negotiator Ghalibaf responded by saying: "Don't they think that if their threats had any effect, they wouldn't be in this desperate situation today?... No matter how much they talk, it is we who take action."

On June 21, fighting was reported to have diminished, but Israeli Prime Minister Netanyahu insisted that the Israeli military would remain in southern Lebanon for as long as is necessary to protect northern Israel.

Hezbollah leader Qassem had rejected any Israeli military presence in southern Lebanon and said Hezbollah would defend itself.[3]

Speaking before the talks in Switzerland, US lead negotiator Vance said Trump had asked negotiators to "turn over a new leaf".

He added that if Iran's leadership was willing to give up being a "driver of regional instability" and its "nuclear weapons ambitions for the longer term", then the US "is willing to fundamentally transform our relationship with that country.” Iran has insisted its nuclear program is peaceful.

The talks began on June 20 in Switzerland, after last week's first agreement between the US and Iran. Trump’s son-in-law, Jared Kushner, and special envoy Steve Witkoff joined Vance. Ghalibaf was accompanied by Iran's Foreign Minister Abbas Araghchi. Also in Switzerland were Pakistan's prime minister and army chief, and the Qatari prime minister. Pakistan has functioned as a mediator throughout the war and hosted an earlier round of negotiations between the US and Iran. Qatar has also mediated, and on June 21, Qatari Prime Minister Al Thani said he welcomed the continuation of US-Iran talks.

On June 22, the first round of talks between high-ranking U.S. and Iranian officials in Switzerland ended, after a tense opening marked by ?Tehran's announcement it had again closed the Strait of Hormuz and Trump repeating his threats to resume attacks on Iran. A joint statement from the mediating nations, Qatar and Pakistan, said the U.S. and Iran agreed to a roadmap toward a final deal within 60 days. Technical talks will continue for the rest of the week in Switzerland.[4]

The first round of negotiations between the US and Iran ended with "encouraging progress", mediators Qatar and Pakistan said. The mediators' joint statement said that a "communication line" had been formed "to avoid incidents and miscommunication with the aim of safe passage for commercial vessels through the Strait of Hormuz.” Both sides also agreed to set up a "de-confliction cell" among the US, Iran, and Lebanon, eased by the mediating countries, to end military operations in Lebanon, their statement said. Foreign Minister Araghchi separately declared “major progress” in ending the war in Lebanon. He also said the US has waived sanctions on Iranian oil exports and released some of Iran’s frozen assets. He added that a major reconstruction and development plan for Iran has been launched.[5]

Iran said on June 22 that “important steps” were agreed during talks in Switzerland to pave the way for negotiations on a final agreement with the US.

Later, Baghaei, speaking for the Iranian delegation holding the talks, said the war on all fronts, including Lebanon, must end, and that all clauses of the MoU had been discussed. According to the mediators, there has been constructive engagement, and the working groups formed by the negotiators are to begin work at once. A lot of work remains to be done, and it is not yet clear how these groups will be formulated, in which capacity they will work, or what format any future meaning will take. Overall, it appears that there has been movement.[6]

As expected, on June 22, Iranian Foreign Minister Araqchi said ?his country had secured waivers for oil and petrochemical exports, the release of some frozen assets, and the launch of a reconstruction and development plan for Iran. Oil prices had tumbled over the past week to levels unseen since the war started on February 28 with U.S.-Israeli attacks on Iran. After the joint statement, Brent crude futures fell further, dropping more than $1 to $79.44 a barrel.[7]

The first paragraph of the MoU agreement notes that the US, Iran, and allies will declare an "immediate and permanent" termination of military operations on "all fronts" - including Lebanon. From the US perspective, Trump has been growing increasingly concerned that Israeli military operations against Hezbollah could upend the agreement with Iran.

Tehran, for its part, has repeatedly said it expected Lebanon to be covered by the truce. Any continuation of Israeli military operations in Lebanon would be a "violation of the understanding" and "necessary measures will be taken", a spokesperson for the Iranian Ministry of Foreign Affairs said earlier.

The agreement notes that "from now on," neither side will start military operations or threaten the other, and will ensure "the territorial integrity and sovereignty" of Lebanon. The final agreement will lead to the permanent "termination" of the conflict, the document says. It is unclear how Israel will react to this point.[8]

On June 22, the head of the IRGC’s Quds Force had warned Israel to leave southern Lebanon or face a repeat of its unconditional withdrawal from the country in 2000. Qaani said that if Israel persisted in its “aggression and occupation,” it would be kicked out in “humiliation and defeat.”[9]

Despite ?the announcement of a new ceasefire in Lebanon on June 18, there has been scant sign of an end to fighting there. Iran said on June 20 that as a result, it had again shut the strait, whose closure for nearly four months caused the biggest disruption of global energy supplies in history. More than 1 million people have fled their homes in Lebanon since Israel invaded in March to pursue Hezbollah fighters who fired across the border in support of Tehran. On June 20, Southern Lebanon saw some of the heaviest traffic since the MoU was signed, as residents returned home. Some stood beside cars backed up on the highway and waved Hezbollah flags.[10]

Iran's lead negotiator, Ghalibaf, has dismissed Donald Trump's threat to renew strikes. The first round of negotiations between the US and Iran to reach a final deal to end the war had ended with "encouraging progress", mediators Qatar and Pakistan said. In a joint statement early on June 22, Qatar and Pakistan said that the parties had agreed to "a roadmap towards reaching a final deal within 60 days”. Iran’s foreign minister Seyed Araghchi said there had been "major progress" towards ending the conflict in Lebanon. The MoU signed earlier includes a commitment to ending the fighting on "all fronts" - including Lebanon - and the reopening of the Strait of Hormuz.

"Pakistani and Qatari mediation has delivered major progress to end the Lebanon War," Araghchi said.

"Oil and petrochem exports are waived, blockade lifted, some frozen assets released, and a major reconstruction & development plan launched for Iran."

The Iranian lead negotiators left the talks in Switzerland on June 22, with technical discussions between the parties due to continue.[11]

The mediators' joint statement said that a "communication line" had been formed "to avoid incidents and miscommunication with the aim of safe passage for commercial vessels through the Strait of Hormuz".

Both sides also agreed to set up a "de-confliction cell" among the US, Iran, and Lebanon, eased by the mediating countries, to end military operations in Lebanon, their statement said. Araghchi said the first "real test" would be the Lebanon de-confliction cell.

Lebanese President Aoun spoke to senior officials from the US and Qatar on June 22 about the issue and, more broadly, about combining a ceasefire in Lebanon, his office said.

Vance said Trump had asked negotiators to "turn over a new leaf". He added that if Iran's leadership was willing to give up being a "driver of regional instability" and its "nuclear weapons ambitions for the longer term", then the US "is willing to fundamentally transform our relationship with that country".

Under the first deal signed on June 17, Iran was to reopen the Strait of Hormuz, the key shipping channel through which 20% of the world's oil and natural gas travels. The US also agreed to lift a military blockade on ships going to and from Iranian ports.

The deal also includes a $300bn plan for Iran's "reconstruction", and the US ending "all types of sanctions" on it. But the issue of Iran's nuclear program is still to be negotiated.

On June 21, some vessels appeared to be entering, exiting, and transiting the strait, according to location data on the maritime tracking website MarineTraffic, despite Iran's claim - disputed by the US - to have closed the strait.[12]

On June 22, Vance said talks with Iranian officials in Switzerland ?had laid a "good foundation" for a final peace deal, despite tensions over the Strait of Hormuz and Lebanon. The two sides, trying to build on an interim deal signed earlier, ?agreed to a roadmap towards a permanent agreement within 60 days at the talks in Switzerland, mediators Pakistan and Qatar said. They also agreed on a mechanism to end fighting in Lebanon between U.S. ally Israel and Iran-aligned Hezbollah. They opened a communications line to help ensure safe passage for commercial ships through the Strait of Hormuz. Vance said Tehran had agreed to allow nuclear inspectors in, to set up mechanisms to manage its assets frozen abroad, and to manage ceasefires.[13]

"We laid a very good foundation for a successful final deal," he told reporters after taking part in the talks.

Since the US bombed Iran's nuclear facilities in ?June last year, Iran has let the International Atomic Energy Agency inspect only facilities that were not attacked in those strikes. The IAEA halted inspections altogether after ?the U.S.-Israeli strikes that began the war with Iran on February 28, and they have not resumed since.

Vance played down tensions over a threat on June 21 by Trump to restart the war after Iran ?again closed the Strait of Hormuz, citing Washington's failure to halt the fighting in Lebanon.

"There was a little bit of threatening, there was a little bit of whining, but at the end of the day, the talks ?continued, and we made great progress," Vance said.

Iranian Foreign Minister Araqchi said that Tehran had secured waivers for oil and petrochemical exports, the release of some of its frozen assets abroad, and the launch of a reconstruction and development plan for Iran.[14]

Vance said Kushner had developed a process in which the US and Qatar would have control over Iranian funds once they are unfrozen, allowing the money to be spent on US corn, soy, and wheat. Following on from the June 18 MoU, the US Treasury Department issued a general license for Iran on June 22, authorizing the production, delivery, and sale of crude oil, petrochemicals, and petroleum products of Iranian origin through August 21.

Technical talks were due to continue, and Pakistani Prime Minister Sharif said that the first round of talks had "concluded successfully. “The discussions ?were held in ?a positive and constructive atmosphere and yielded encouraging progress," he said.

Oil prices had risen sharply when Tehran started blockading the Strait of Hormuz, prompting a U.S. blockade of Iranian ports, but fell after the interim deal to their lowest since the war began.

After June 22, a joint statement by Qatar and Pakistan, oil prices dipped further as worries about a global supply shortage eased, with the global benchmark Brent crude trading below $80 per barrel.

Before June 21's talks officially began, Trump said he had told Iranian officials, "you won't have a country" if they tried to close the strait again.

After Trump's threats became public, the Iranian delegation refused to return to the room where talks were held, though messages were exchanged through the mediators.

The MoU calls for reopening the Strait of Hormuz and ending all hostilities, including in Lebanon, where violence continued after a ceasefire was declared on June 19.

Accusing the US of not meeting its commitment to halt fighting in Lebanon, Iran said earlier that it had again stopped maritime traffic ?through the strait. But ship tracking data showed two crude tankers with just under 2 million barrels of oil had sailed through the strait on June 22, in a ?sign that traffic is picking ?up again, even though the sailings through Hormuz.

Israeli President Isaac Herzog said Israel was not opposed to a diplomatic end to the Iran war. Still, any agreement must ensure that Tehran cannot use funds it receives under the deal for military purposes or to support regional proxies.[15]

Meanwhile, the price of oil has fallen to levels not seen since before the Iran war as traffic through the key Strait of Hormuz shipping route gradually resumes. Global benchmark Brent crude briefly fell below $72.48 a barrel, the price it was at the day before the US and Israel launched attacks on Iran on February 28, before edging up to $73.23.Energy prices have been on a wild ride since Iran responded to the strikes by effectively closing the strait, a critical waterway for oil and gas shipments. The cost of crude has been moving sharply lower since the US and Iran signed the MoU.[16]

The number of vessels crossing the Strait of Hormuz has risen significantly since the MOU was signed, according to maritime intelligence firm Kpler. Its latest data suggest 284 vessels have made the transit since 18 June, the day after the deal was signed, although that is still well below the pre-conflict average of some 138 crossings per day. The ships passing through the waterway in recent days include those carrying crude oil, liquefied natural gas (LNG), fertilizer, and other goods, Kpler said.

The US Navy has also provided guidance for vessels to travel along a southern route that is safe from mines and other obstacles laid since the war began. But the number of ships crossing the strait is still below the levels seen before the war, when more than 100 ships a day used it. Hundreds of ships still appear to be waiting in the Gulf.[17]

Fuel prices at the pump rose sharply when the war in Iran began, and now the focus is on how quickly they will fall. The average price of regular gasoline in the US has dropped to around $3.93 per gallon after reaching $4 per gallon in April, its highest since 2022, but it stays well above pre-war levels.[18]

The US military said it launched strikes on Iran on June 26 in retaliation for an Iranian attack in the Strait of Hormuz a day earlier, hours after President Trump called the Iranian action a “foolish violation” of the fragile cease-fire between the two countries.

Centcom said it had struck Iranian missile and drone storage locations and coastal radar sites as a “powerful response” to the Iranian attack on June 25. The US described the strikes as a retaliatory measure rather than a resumption of major combat operations.[19]

Iran’s security forces claimed that in response to the American attacks on June 26, Tehran had struck US Army positions in the region. There was no immediate confirmation from the U.S. military of such strikes.

Iran’s IRGC said it had carried by state media that the U.S. strikes had violated the cease-fire, and warned that if such aggression “is repeated, our response will be more extensive.”

Earlier, Vance said that the US had “honored” the cease-fire agreement, but warned that it would respond to Iranian aggression. “If they have disagreements about how the MoU is being applied, they can pick up the phone,” he said, referring to the MoU the US signed with Iran. “But violence will be met with violence.” Trump said earlier that Iran had launched at least four one-way-attack drones, one of which hit the upper deck of a “large and very expensive Cargo Carrying Ship,” adding that the US had knocked down three other drones. He added that the ship, though damaged, was able to continue on its way.[20]

Iran’s strike on the vessel, the Ever Lovely, a container ship that was passing near the Omani side of the strait, appeared to be the first known Iranian attack on a commercial vessel since the signing of a preliminary peace agreement between Tehran and Washington last week. It laid bare the challenges to restoring prewar levels of traffic through the strait, a crucial conduit for oil and gas shipping.

The attack prompted the International Maritime Organization, a UN agency, to suspend an effort to help hundreds of stranded vessels leave the Persian Gulf. At least two tankers turned around after Iran’s warning earlier that day, according to Lloyd’s List Intelligence. At the same time, the number of ships passing through the strait fell to 54 on June 25 from 73 a day earlier, according to Kpler, a maritime data firm.

Although the US and Iran have agreed to restore access to the strait, the preliminary accord does not stipulate exactly how that should happen. Trump declared the waterway open to unrestricted navigation.

Iran reaffirmed its claim to be the central authority for managing marine traffic through the strait. The Iranian Foreign Ministry said that the strait lay within Iranian and Omani waters. It cited a section of the U.S.-Iran deal that Tehran says allows it to manage marine traffic in the strait.

The agreement says that Iran would “make arrangements using its best efforts” for the safe passage of commercial vessels. That wording is vague, leaving room for differing interpretations.

Iran’s deputy foreign minister, Gharibabadi, said that safe passage through the strait was “not guaranteed under vague arrangements, parallel routing systems or decision-making processes that exclude Iran as a coastal state.”

After the US counterattack on June 26, Azizi, a conservative Iranian lawmaker and the head of Parliament’s national security committee, said that the US attacks had been a “reckless violation of the cease-fire” and warned that the attacks would lead to “retreat and regret” for the Americans. Azizi further said the attacks reflected how Trump “has no commitment to the principles of negotiations”

Meanwhile, Trump had declared that there would be no tolls for passage through the waterway unless imposed by the US.

Iran had discussed with Oman the idea of charging passing ships service fees, a proposal that has drawn Trump's anger.

Rubio had met with foreign ministers from the Gulf Cooperation Council to reassure regional allies about the preliminary deal with Iran. In a joint declaration after the meeting, the US and the Gulf countries in the organization called for “free, unconditional and unrestricted navigation” through the Strait of Hormuz. They rejected tolls, fees, or any attempt by any country to assert control over the strait. Iran’s Foreign Ministry denounced that declaration as “interventionist, irresponsible and provocative,” in a statement carried by state media on June 26.[21]

After the war began four months ago, maritime traffic through the strait, which previously carried about a fifth of the global oil trade and liquefied natural gas, came to a virtual standstill.

Iran has since looked to exert control over the strait alongside Oman, which lies across the waterway, saying it plans to charge ships a fee to use it and to obstruct vessels that stray outside defined paths.

Earlier, the US had accused Iran of hitting at least two commercial ships with missiles or drones, and bombing ?Iranian military facilities in response. Iran, in turn, launched ?missiles and drones at US military ?sites in Kuwait and Bahrain, with both sides accusing each other of breaking the ceasefire.

The war has pushed up global inflation and put Trump under domestic political pressure ahead of the midterm elections in November, which will decide control of the U.S. Congress.

On June 29, the White House said Trump had authorized some duties on phosphate fertilizer imports from Morocco, as US farmers grapple with shortages, and shipments of fertilizer through the Strait of Hormuz are expected to return to pre-conflict levels only gradually.

"The meeting in Doha is going to be perhaps important, perhaps not," Trump told reporters in the Oval Office. "We're going to find out."[22]

On June 30, Iran said it would not meet with top U.S. envoys who flew to the region following ?an outbreak of hostilities, clouding the prospects for a lasting peace between the two countries.

Iranian officials also said the two sides must still ?sort out the terms of a ceasefire they signed on June 17 before they could tackle more difficult topics, such as possible limits to its nuclear program.

The developments indicated that the two sides are far apart on key pillars of the initial framework, which calls for Iran to lift its chokehold on the Strait of Hormuz in exchange for financial incentives and sets up 60 days of negotiations to work out a permanent peace deal.[23]

Looking for ways to break the deadlock, Trump, who ?has publicly threatened Iran with more attacks, has decided to give diplomacy more time.

Shipping has partially resumed through the strait, which managed one-fifth of global ?oil and liquefied natural gas before the war broke out on February 28.

Meanwhile, Iranian officials said they had the right to manage traffic, along with U.S. ally Oman, which lies on the other side of the strategic waterway, and would impose tolls in mid-August when the 60-day period expires.

"The sovereignty of the Strait of Hormuz lies with Iran and Oman, and traffic in the Strait is subject to arrangements determined by Iran," Iran's top negotiator, Qalibaf, said.

Vance said Iran would be prevented from charging tolls on ships passing through the international waterway, telling The Michael Knowles Show, "This is not going to end in a place where the Iranians are collecting tolls on ships ?going through the Strait of Hormuz."

Vance also ?said on ?June 30 that oil flows through the Strait of Hormuz had returned to pre-war levels, even exceeding that on some days, without citing figures.[24]

Despite the uncertainty, oil prices have fallen since the weekend, when the US bombed Iranian military ?facilities in response to drone strikes on commercial ships, and Iran attacked US military sites in Kuwait and Bahrain.

Vulnerable economies, however, could remain at risk from food and fuel price increases even after energy markets experience relief, the UN trade and development agency said on June 30. The war pushed up global inflation and has put Trump under political pressure before the midterm elections in November, which will decide control of the US Congress. Trump and Treasury Secretary Scott Bessent are both urging gasoline retailers to lower prices.[25]

Talks at an indirect level between US and Iranian officials over the unfreezing of at least $6bn in Iranian assets will recommence on July 1 in Doha, Iran has said. The two sides have yet to have their first face-to-face meeting since signing a deal to extend the ceasefire and reopen the Strait of Hormuz.

Witkoff and Kushner were in Qatar on June 30 for talks covering regional issues, including the Iran ceasefire and Lebanon. Still, Qatar’s foreign ministry spokesperson, Al-Ansari, stressed these were with Qatari mediators. “They are not here for their negotiations with the Iranians,” he said.

The US team is seeking details of a plan for Iran to charge tolls in the Strait of Hormuz and how it relates to proposals for consultation being tabled by Oman that would introduce fees for navigational services.

The lack of renewed direct contact between the US and Iran on how to implement the memorandum of understanding signed on 17 June reflects tensions over Iran’s determination to maintain control over commercial oil tanker traffic through the Strait of Hormuz, as well as Iran’s opposition to the proposed Lebanon ceasefire negotiated by Israel, the US, and the Lebanese government earlier.

Talks between Iran and the US have not even started on Iran’s nuclear program, even though only 60 days from  June 17 had been set aside to complete the complex talks, and further negotiations appeared at risk after both sides traded fire in the Strait of Hormuz earlier.

In theory, those talks can be extended beyond the 60-day deadline, but slow progress is starting to alarm some diplomats.[26]

Iran’s foreign ministry spokesperson, Baghaei, speaking at a press conference in Tehran, warned European powers such as France and the UK not to look to become involved in de-mining the Strait of Hormuz. “Iran is better aware of its responsibilities than any other party and is capable of fulfilling them, and there is no need for the intervention of others. Interventions that, even if made with good intentions, will in practice only complicate the situation,” he said.

Western powers object to Iran’s plan to impose tolls for commercial shipping passing through the strait. Still, they may be more open to discussing Oman’s plan for voluntary contributions or fees charged for specific services.

Iran’s top negotiator, Ghalibaf, said on June 30: “The sovereignty of the Strait of Hormuz lies with Iran and Oman, and traffic in the strait is ?subject to arrangements determined by Iran”, ?adding that fee-free passage through the strait is only ?for ?60 days, as per the memorandum of understanding.

The UN’s International Maritime Organization was holding informal discussions with Iran about Tehran’s objections to the IMO opening a sea route through the strait close to Oman in conjunction with the US and Oman. At one point last week, the IMO thought it had the agreement of the Iranian foreign ministry on the route, but Iran then attacked two ships, possibly fearing its control of the strait was being eroded.[27]

The IMO Secretary General Dominguez then suspended the route to hold talks with Iran.

According to data from Kpler, a maritime tracking firm, 40 ships transited the waterway on June 29, up from 24 the previous day and 39 earlier. Hundreds of vessels have been stranded since the war between the US and Iran broke out on 28 February, leaving as many as 10,000 seafarers stranded. Not all ships have their transponders on, making a correct count difficult, but Iran may regard this level of traffic as so far below normal that it keeps pressure on oil prices.

It is committed to using its best endeavors to lift the blockade in the strait within 30 days.

Giving a relatively optimistic account of the state of relations with the US, only days after the two sides exchanged fire arising from a dispute over the control of the strait, Baghaei said: “From the beginning, when we entered this diplomatic process, no one imagined a smooth and unchallenged process. Keep in mind that this diplomatic process began after two wars in less than a year […] we expected to face challenges in the implementation phase.”[28]

Meanwhile, there is a power struggle within Iran itself. Benoit Faucon  and Summer Said, in their article “Iran’s Diverging Priorities Are Jeopardizing U.S. Peace Talks,” have argued that:[29]

A power struggle inside Tehran is threatening U.S.-Iran peace talks, with civilian leaders seeking billions in frozen assets and hardline military officials pressing for control of the Strait of Hormuz, said officials familiar with the negotiations. Civilian leaders, led by President Masoud Pezeshkian, are aiming to free up billions of dollars in frozen funds to bring some relief to the millions of Iranians struggling with the economic aftershocks of the war and the critical damage to Iran's oil industry.

Given Iran’s precarious economic conditions, it will most likely insist on beginning the implementation of Points 6 & 11of the MoU. Point 6 of the MoU addresses funding for Iran's reconstruction. It says the US and regional partners will develop a "definitive, mutually agreed plan" worth at least $300bn for reconstruction and economic development in Iran. The final mechanism will be agreed upon within 60 days of the final deal, and all licenses, waivers, and permissions will be granted by the US. However, this does not mean the US will be financially involved. The US does not have to pay "a cent of money" to Iran or contribute to the fund. But as a hypothetical example, the US has shown that if Iran "behaves", the UAE could build a power plant in Iran, with US blessing. Trump and other officials have gone to great lengths to make clear to the US public that it will not be paying Iran directly, which the administration says stands in stark contrast to the 2015 nuclear agreement between Iran and the Obama administration.[30]

Point 11 of the MoU deals with frozen funds. This point has been a significant obstacle to negotiations.

Iran had long insisted that its frozen assets be released, offering the country another economic lifeline.

The MoU notes that the US "undertakes to make fully available frozen or restricted funds" upon signing, and that procedures will be agreed upon during negotiations.

Some assets will be released while post-MoU talks continue to reward Iran when it follows aspects of the agreement, such as beginning to deal with its highly enriched uranium.[31]

Ultimately, Iran looks forward to the implementation of Point 7 of the MoU, which pertains to the end of sanctions. It says that the US will end all economic sanctions against Iran, including those imposed by the UN Security Council and those imposed unilaterally by the US. The timeline, however, is unclear. The document notes that the schedule will be agreed upon as part of the final deal, but both sides acknowledge their intent to "immediately" address the issue in later negotiations. Iran has been hard-hit by sanctions, and the US has looked to cut Tehran off from the global financial system.[32]

After Iran and the US exchanged attacks at the end of last week, attention has once again turned to diplomacy, with Trump saying that the two sides would hold talks in Doha on June 30.

But on June 29, Iran’s Deputy Foreign Minister, Gharibabadi, rejected the premise that any technical-level negotiations with the US would be held in Qatar and instead said that consultations would continue with Qatari officials.

Fazaeli, a member of the Iranian supreme leader’s office, earlier said that Iranian negotiators canceled talks scheduled with the US due to fundamental disagreements over the Strait of Hormuz and other issues.

The reciprocal US-Iranian strikes, as well as Iran’s signaling that it is in no rush to return to talks, suggest that any upcoming discussions between Iran and the US will focus on implementing what has already been agreed to. Iran is concerned about the Strait of Hormuz, the vital maritime route that it seized as its primary leverage against the US during the war.[33]

Earlier, both sides accused each other of violating commitments made under the MoU, including Article 5, which says Iran will “make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only from the Persian Gulf to the Sea of Oman and vice versa”.

The recent strikes have made clear the danger posed by a lack of coordination over the Strait of Hormuz. Iran’s position is that it will not be bypassed, with Foreign Minister Araghchi saying that other countries should not “interfere in the issue of managing the Strait of Hormuz and the arrangements adopted by the Islamic Republic of Iran for reopening the Strait of Hormuz.”

The foreign minister said that it would take at least a month to return the strait to its capacity before the US-Israeli war on Iran began on February 28.

Iranians also said they plan to entrench their hold on the Strait of Hormuz by charging fees for insurance, environmental, and other services, but Washington and others have vehemently rejected any tolls. The MoU stipulates there will be no tolls for the 60-day duration.[34]

On July 1, the US and Iran held technical talks in Doha as they look to ?agree on the flow of shipping through the Strait of Hormuz and secure a lasting ceasefire. Kushner and Witkoff met the prime minister of Qatar to lay the groundwork for the negotiations, but would not attend the discussions themselves. Earlier, the US and Iran ?have sparred publicly over the meaning of the interim pact, leading to tit-for-tat military strikes over the past week. Iran is determined to win international recognition ?of its control over the strait and its ability to levy fees on ships entering or leaving the Gulf, even if it has to do so by force. Traffic has partially resumed through the strait.[35]

The talks in Doha are structured as sessions between chief negotiators and specialists, the source with knowledge of the talks said. They began on ?June 30 and continued on July 1.

Iran has said publicly that its priorities include agreeing on the management of the strait and the release ?of $6 billion ?in Iranian frozen assets. The current round of discussions will focus on those two issues.

The stated priority of the US is to ensure the free flow of traffic through the strait.

Trump faces political pressure to address the economic fallout from the war before the midterm elections in November, which will decide control of the US Congress. In Iran, the theocratic leadership survived the war but faces domestic anger over a shattered economy.

Oil prices, which dipped sharply in the second quarter of the year, fell more than 1% on July 1.

The interim deal between the US and Iran also provides for an end to a parallel conflict between ?Israel and ?the Iran-backed militant group Hezbollah in Lebanon.[36]

Since the MoU signing on June 17, new tensions have risen between the US and Iran over the passage of ships through the Strait of Hormuz, US bombing of Iran, Iranian attacks on US military assets in Kuwait and Bahrain, and continuing Israeli assaults in Lebanon.

On June 30, Vance said that the Trump administration was in a “great position” regardless of how the talks pan out. The US “obviously” wants the talks to succeed, Vance said, but added that his country was “still in a much stronger position” than Iran even if they fail. He insisted that Tehran’s nuclear program and military have been “destroyed”. He warned that Trump has made clear that any Iranian attacks on shipping in the Strait of Hormuz would prompt a US military response. Vance again said Iran would be “permanently transformed” if negotiations aimed at securing a lasting settlement are successful.[37]

He also said technical talks with Iran are ongoing on specific points included in the MoU.

Tehran has denied holding direct talks with the US in Doha. Instead, Iran said it will hold indirect talks on the US-Iran deal with mediator Qatar to discuss implementing the MoU with the US and releasing frozen Iranian assets.

“There were scheduled talks, really technical talks, building on the negotiation that we’ve already had. Those are definitely happening tomorrow,” Vance said on June 30. He said he found Tehran’s public statements “fascinating and frustrating,” noting that Iranian officials deny peace talks while acknowledging technical discussions.

“They’ll say, ‘No, no, there aren’t peace talks ongoing, but there are technical talks between the United States and Iran about the peace deal,’” Vance said. “It’s a Persian negotiating tactic and a Persian rhetorical device that I don’t understand.”[38]

Iran is reluctant to return to direct talks with the US because of a growing skepticism inside Iran about the MoU. Therefore, senior officials such as Araghchi or Ghalibaf were reluctant to attend in Doha. [39]

Meanwhile, Iran seeks access to frozen funds. A big point of contention for Iran – and something that will also likely be on the agenda during any talks – is gaining access to the country’s own funds that have been frozen abroad for many years, as a result of US sanctions championed by the Trump administration.

Trump and other officials have emphasized that any access to funds will be granted only later, contingent on Iran’s performance in enforcing its commitments.

Iranian officials are trying to avoid a repeat of earlier arrangements in which funds were released in name only, but remained effectively inaccessible. President Masoud Pezeshkian said Iran expects that at least $6bn held by Qatar will be released.

The MoU stipulates that Iran’s funds will be “fully available for use” once the agreement is implemented, with release procedures to be mutually agreed upon during negotiations.

It also says the funds must be fully usable, whether they stay in the original account or are transferred, and must be payable to any ultimate beneficiary appointed by Iran’s Central Bank. The US is to issue all necessary licenses and authorizations.

Trump said Iran will use the released money to buy corn and other humanitarian items such as food and medicine. Iran’s central bank chief Hemmati said that while the country may opt to buy agricultural products from the US – as it has done for years – if their quality and price are agreeable, the text of the MoU does not bind it to do so.

Earlier, Iranian President Pezeshkian said Iran expected $6bn of the frozen Iranian funds to be released by the US as a first step. The matter is currently being discussed in the Doha peace talks. [40]

Iran has several other goals in its participation in any upcoming negotiations. They include US recognition of Iranian sovereignty and non-interference in internal affairs, US military pullback from Iran’s periphery, a halt to the imposition of new sanctions or regional force buildup during the MoU period, a reconstruction or economic development package, and the introduction of formal monitoring and dispute-resolution mechanisms.

Lebanon is also a major focus for Iran.

The first point of the MoU stipulated the immediate and permanent halt of military operations on “all fronts,” including Lebanon, where Tehran-backed Hezbollah has been fighting an armed resistance against Israel for years.

While Israeli attacks in southern Lebanon and other parts of the country have decreased in intensity recently to prevent another confrontation with Iran, the US has ended up entrenching Israel’s military presence inside Lebanon through a deal brokered with the government of Lebanon.

The agreement does not bind Israeli soldiers to evacuate southern Lebanon or halt all attacks, effectively undermining the MoU signed with Iran.

Hezbollah has also blasted the deal, but Lebanese government officials have endorsed it, seeing a path to a future where Hezbollah is fully disarmed and replaced in southern Lebanon by the country’s official army.[41]

The interim deal between ?the US and ?Iran also provides for an end to the conflict between Israel and the Iran-backed militant group Hezbollah in ?Lebanon.

But Lebanon's powerful parliament speaker Nabih Berri, an ally of Hezbollah, cast doubt on a separate, US-brokered framework deal between Lebanon and Israel to halt that war.

The deal risks entrenching a stalemate by tying ?Israel's withdrawal from southern Lebanon to Hezbollah's disarmament.[42]

The next phase of the peace deal is going to prove incredibly challenging.

It has already been set up that Iran’s missile program will not be subject to negotiations related to the MoU.

But some of the hardest-line voices in Tehran want to go further, and believe that the country’s nuclear program, over which Israel and the West started two wars over the past year, must no longer be discussed at all with foreign powers.

More than 60 members of the powerful Assembly of Experts signed a statement that said negotiators must not cross Supreme Leader Mojtaba Khamenei’s perceived red lines. In this vein, they demanded no talks on Iran’s nuclear rights, revenge for assassinated leaders, the closure of the Strait of Hormuz, war compensation, and the removal of sanctions.

Iranian authorities have previously expressed willingness to make nuclear concessions, including dilution of highly -enriched uranium now buried under the rubble of bombed facilities. But they have said this will only be done after a clear, step-by-step timetable that guarantees Iran will enjoy the economic benefits of sanctions being lifted.[43]

The nuclear issue is the most problematic and requires painstaking, highly technical deliberations to address uranium enrichment.

Point 8 of the agreed-upon MOU concerns nuclear weapons. Iran has agreed not to get or develop a nuclear weapon, and both sides have agreed to deal with the enriched uranium Tehran already has.

The method of managing the material is unclear. The document notes that the mechanism "will be mutually agreed upon" in later talks, but that, at a minimum, it will be "downblended” under the supervision of the IAEA. The Trump administration described this as a "minimum standard" and a "major win" for the US.

Trump has said that preventing Iran from having a nuclear weapon was "99%" of what he wanted by launching Operation Epic Fury earlier this year. The problem is that dealing with the enriched uranium is very problematic.

According to the third point of the MoU, the US and Iran will commit to negotiating and reaching a final deal within 60 days. However, that timeline could be extended with mutual consent.[44] The Israeli and US bombings of key enrichment facilities have buried the stockpile, and there are no plans to recover the buried material. IAEA has expressed grave concern and lost knowledge over parts of the stockpile. Finally, Iran agreed to allow UN nuclear inspectors from the IAEA. Diplomatic efforts continue, but trust and access remain serious obstacles. Therefore, there is much uncertainty about the eventual outcome. Obviously, the delicate matter will take time to resolve, and the 60-day deadline will most likely be extended.

Because the US has described the deal as performance-based, the sanctions relief specified in point 7 is contingent on Iran's compliance with point 8.[45]

Points 9 & 10 of the MoU deal with the 'status quo' matter. They specify that the US and Iran agree to a "status quo" of their nuclear program in the meantime, until the enriched uranium can be dealt with. In practice, this means that the US will not impose new sanctions. In the meantime, it will issue waivers for the export of oil and petroleum products, as well as for associated services, such as banking transactions and transportation.[46]

But other than the various complicated issues of the peace deal, Israel's continuing aggression in Lebanon, and Trump’s failure to stop them, is the immediate problem that can lead to the breakdown of Iran-US peace talks. Since the MoU was signed, there has been an upsurge in fighting between Lebanese armed group Hezbollah and Israeli forces in southern Lebanon, and Israeli air strikes that the health ministry says have killed dozens of Lebanese, including women and children.

A new ceasefire between Israel and Hezbollah was declared on June 19. Continued clashes and air strikes prompted Iran on Saturday to announce it had shut the Strait of Hormuz, though tracking data shows vessels have continued to pass through it.

Hezbollah said it was committed to the ceasefire but that it would confront any attempt by Israel to "seize territory or expand its occupation.” The Israeli military's chief of staff said that Hezbollah had built an "underground military fortress" and that its destruction was one of the "primary operational focuses" of Israeli forces.

Fighting was reported to have diminished on June 21, but Netanyahu insisted that the Israeli military would remain in southern Lebanon for as long as was necessary to protect northern Israel.[47]

The MoU had explicitly called for fighting to stop on all fronts, but in Lebanon, Israeli air strikes have since killed at least 67 people, while Hezbollah attacks have killed five Israeli soldiers.

Israel has insisted that its conflict with Hezbollah is separate from the war on Iran, which it mounted alongside the US on February 28.

Lebanon was drawn into the war shortly afterward, when Iran-backed Hezbollah launched rockets into Israel in retaliation for a strike that killed Iran's supreme leader.

Israel responded by launching a bombing campaign across Lebanon and occupying around 5% of the country's territory in the south - hoping to drive back Hezbollah fighters from its northern border - and has said it has no intention of withdrawing.

Since March 2, at least 4,106 people have been killed in Lebanon, and ?a million people have been displaced during Israel’s military campaign against ?Hezbollah. Israel also lost 36 Israeli soldiers and a few civilians.[48]

On June 29, a security deal between Israel and Lebanon risks entrenching a stalemate rather than resolving Israel's underlying conflict with Hezbollah by tying Israel's ?pullout from southern Lebanon to the Iran-aligned group's disarmament, a condition regional analysts and politicians say is unattainable.

At its core is a bargain that isn’t workable, as  Hezbollah ?has flatly rejected disarmament, and no Lebanese government has the power to enforce it.

With Hezbollah unlikely to disarm, Israel has political cover to keep an open-ended military presence in southern Lebanon, which it invaded after Hezbollah fired at Israel on March 2 in solidarity with Tehran over the war in Iran. The deal leaves the Lebanese state trapped between obligations it cannot meet and sovereignty it cannot fully reclaim. The framework deal also collides with Lebanon’s political realities, asking ?a fragile sectarian state to confront the most powerful armed faction in the country despite a post–civil war system built on power-sharing rather than coercion.[49]

The Lebanese army was neither structured nor equipped to disarm Hezbollah, ?and expecting it to do so ignored both the organization’s entrenched military capacity and the fragile sectarian balance on which Lebanon's stability rests. The imbalance is built into the ?agreement’s design, with sweeping obligations placed on Lebanon but no reciprocal guarantee of Israeli withdrawal. The agreement has put all the burden on Lebanon, and it creates a structure that ?allows the Israelis to remain in southern Lebanon indefinitely. In other words, the deal was "born dead" and is structurally flawed, hinging on an impossible-to-meet condition in practice.

Israel had already set up a buffer zone in southern Lebanon about five to six miles deep while tying any future withdrawal to Hezbollah’s disarmament. The terms of the deal risk the buffer zone becoming long-term ?and giving it diplomatic legitimacy, which amounts to favoring Israel at the cost of Lebanon’s sovereignty. The conflict in Lebanon has been a central part of diplomacy towards ending the wider US-Iran war.

The framework agreement signed in Washington affirms that Israel has no claim to Lebanese territory and makes the Lebanese army authority in the south contingent on ?the verified disarmament ?of non-state armed groups, including Hezbollah. Netanyahu portrays the deal as a historic achievement that could lead to broader peace. At the same time, Israeli troops stay deployed in a so-called security zone, which Israel says is designed to protect its north from potential attack.[50]

"We will continue to hold it (territory in the security zone) until Hezbollah and other terrorist organizations are disarmed, and until no further threat to Israel is posed from Lebanon," Netanyahu said earlier.

Lebanese President Aoun welcomed the agreement as a first step towards restoring Lebanon's sovereignty, saying it should allow Lebanese people to return to a fully liberated land.

Parliament Speaker Berri said it amounted to an "agreement of dictates, not one that preserves Lebanon's rights," and that it would not be implemented.

Hezbollah chief Qassem ?declared the deal "null and void" and a "surrender" and said his group would keep fighting until Israel is forced to leave. Hezbollah lawmaker Fadlallah ?warned of "internal conflict" in Lebanon.

Any ?attempt to forcibly disarm Hezbollah would risk deepening sectarian tensions. It will lead to civil conflict, and maybe an insurrection by the Shi'ite community.

Hezbollah's dismantlement was something that would never happen, and the deal in effect legitimized an open-ended Israeli military presence. Nothing will happen. Israel won't withdraw, and Hezbollah won't dismantle.

Also, no ?Israeli prime minister ?has the domestic political space to withdraw while Hezbollah is still armed, and northern Israeli communities are still displaced. A narrower pact ?focused on Hezbollah's pullout from south of the Litani River, an expanded Lebanese army deployment, and an extension of state authority would have stood a better chance of success.[51]

Netanyahu told Israeli troops on June 30 that Hezbollah still had around 12,000 rockets and missiles in its arsenal and that the Israeli military had killed 9,000 militants in ?Lebanon.

Iran has repeatedly demanded a ceasefire in Lebanon as part of its negotiations with the U.S. to end the war ?that began ?on February 28. Israel, which is not directly involved in those talks, opposes linking ?the war in Lebanon to the war with Iran. Under US pressure, Israel agreed to a ceasefire with Hezbollah on June 19, although violence has persisted. Hezbollah has ?repeatedly objected to the negotiations between Israel and Lebanon and is not part of the talks.[52]

Meanwhile, the US- Israel is facing strains that are becoming worrying for Israel. The once-ironclad U.S.-Israeli relationship is deteriorating.

Many Israelis see Trump’s pursuit of a peace deal with Iran as a betrayal, and his repeated berating of Netanyahu has raised doubts about whether they can still call Trump the best friend in the White House that Israel has ever had.

In the recent election results in New York City, three pro-Palestinian candidates backed by Mayor Mamdani, a harsh critic of Israel, defeated moderates in hotly contested Democratic congressional primaries.

All three candidates had fiercely criticized Israel, and it may not be able to count on solid support from the US for much longer. Earlier, the US had provided Israel with concrete aid like billions of dollars in yearly military aid, in symbolic backing like reliable vetoes of anti-Israel resolutions at the United Nations, or even in tax exemptions for U.S. charities helping Israeli causes.[53]

Israel was already losing popularity in the US, and in both parties, largely over its prosecution of the two-year war in Gaza after the Hamas-led Oct. 7, 2023, attacks, in which about 1,200 people were killed and some 250 taken hostage. Tens of thousands of Palestinian civilians were killed in the ensuing war, food shortages caused widespread famine, and Israel’s campaign largely destroyed the enclave.

Americans’ sympathy for the Palestinians exceeded their sympathy for Israel for the first time in a New York Times/Siena poll in September. And 60 percent of Americans said that they held unfavorable opinions of Israel in a Pew survey in April, up from 42 percent in 2022.[54]

Those new lawmakers signaled a broader Democratic turn against Israel. Opposition to Israel is now the major foreign policy issue. It could well be front and center again in the 2028 presidential primary. For Democratic critics of Israel, the rift has focused on the feeling that the two countries no longer share the same values, chiefly when it comes to human rights and Israel’s treatment of the Palestinians.

The special US-Israeli relationship had been taken for granted for decades. Israel’s claim to being the “only democracy in the Middle East” has been tarnished in American eyes both by its oppressive treatment of the Palestinians and by its right-wing government’s efforts to overhaul Israeli institutions and combine its power.

That claim is less important to the US at a time when the Trump administration is emphasizing the exertion of raw power and geopolitical transactionalism over America’s traditional self-image as the leader of the free world.

For Republican critics, many of whom accuse Israel of dragging the US into fighting the war in Iran, the argument centers on how much American and Israeli national interests really still overlap.[55]

After 40 years of Israel calling itself a strategic asset to the US, there’s a legitimate question whether Israel is an asset anymore. The question is: What does the US get from this relationship with Israel?

But the US has a long way to go before the support of Israel could fairly be called into question. The Trump administration has accelerated billions in arms sales and emergency military aid to Israel, backed Israel in peace talks with Hamas, eased some pressure on West Bank settlement expansion, and taken a host of actions to curb anti-Israel protests on American college campuses. In the future, the alliance will likely fray further, and Israel will lose out. Already, because of the talks with Iran, the Trump administration is trying to constrain Israeli actions against its enemies in the region — most noticeably in Lebanon — in ways that Israelis say they never expected.

Israelis also can no longer count on receiving billions of dollars a year in US military aid, something that Netanyahu effectively acknowledged this year when he proposed that Israel gradually wean itself from that aid.

Other measures that an increasingly cold US government could take to express displeasure with Israel include stripping charities supporting West Bank settlements of federal tax-exempt status. Even the Trump administration can publicly lash out at Israel, such as by withholding its veto from UN Security Council resolutions critical of Israel, a step it has taken only rarely over the years.

The strained relationship is starting to enter the Israeli political conversation in the prelude to elections this fall. Bennett, who toppled Netanyahu in 2021 and is trying to repeat that feat, said this week that the US-Israeli alliance was at an all-time low and that repairing it would be a huge undertaking. “For the first time since the establishment of Israel,” he said, “Israel is a net negative in the US. That’s a disaster,” he added. Other candidates have suggested that Israel should crack down on settler violence against Palestinians or give diplomacy a chance rather than trying to solve every problem militarily. For now, Israelis are watching their support in the US continue to bleed.[56]

Meanwhile, the Iranians are calculating that if Trump has not been able to force Israel to abide by the minimal set of agreements of his very own brokered Gaza ceasefire of October 2025, how can he deliver in their own peace talks? Therefore, there is apprehension about peace talks.[57]

Given recent developments, the US is using indirect technical talks with Iran in Doha to manage tensions over the Strait of Hormuz, despite the absence of direct negotiations. For the US, these difficulties spring from Iran’s “diplomatic gambit” to control the Strait of Hormuz. It is trying to clarify Iran’s actual role in the strait under the MoU and to provide further details that may be included in a future agreement.[58]

Undoubtedly, Iran is asserting itself after gaining strategic control of the Strait of Hormuz and is unlikely to give it up easily. Notwithstanding US opposition, the payment of some transit fees by all commercial shipping, as demanded by Iran, is now most likely a fait accompli, and the US will eventually accept it. Given the record, the Iranians are convinced that the US isn’t a dependable partner in any peace talks anymore. Given the deep mistrust between the US and Iran, and the stalemate on the Lebanon issue, the peace talks appear to be stalled for now. However, since both Iran and the US want to end the war, there is still a glimmer of hope. Eventually, Israel will lose support for its aggressions in the region, inside the US, as it has already done elsewhere in the world. Most importantly, sheer political compulsions from all sides will force the US and Iran to reluctantly compromise for the sake of a permanent peace deal ending the four-month devastating war.

Since the MoU signing on June 17, new tensions have risen between the US and Iran over the passage of ships through the Strait of Hormuz, US bombing of Iran, Iranian attacks on US military assets in Kuwait and Bahrain, and continuing Israeli assaults in Lebanon.[30]

Tehran has denied holding direct talks with the US in Doha. Instead, Iran said it will hold indirect talks on the US-Iran deal with mediator Qatar to discuss implementing the MoU with the US and releasing frozen Iranian assets. [31]

Since the MoU was signed, there has been an upsurge in fighting between Lebanese armed group Hezbollah and Israeli forces in southern Lebanon, and Israeli air strikes that the health ministry says have killed dozens of Lebanese, including women and children.

A new ceasefire between Israel and Hezbollah was declared on June 19. Continued clashes and air strikes prompted Iran on Saturday to announce it had shut the Strait of Hormuz, though tracking data shows vessels have continued to pass through it.

Hezbollah said it was committed to the ceasefire but that it would confront any attempt by Israel to “seize territory or expand its occupation.” The Israeli military’s chief of staff said that Hezbollah had built an “underground military fortress” and that its destruction was one of the “primary operational focuses” of Israeli forces.

Given recent developments, the US, on its own, used indirect technical talks with Iran in Doha to manage tensions over the Strait of Hormuz despite the absence of direct negotiations. For the US, these difficulties sprang from Iran’s strategy to control the Strait of Hormuz.

US-Iran tensions remained high, with Iran issuing a fresh warning for vessels to follow Tehran-designated routes through the Strait of Hormuz. And Iran had warned the US and Israel against attacks during the funeral. Centcom announced that a second Marine Expeditionary Unit was running in the Middle East. The group joined the amphibious assault ship USS Tripoli, its escorts, and embarked Marines that had been in the region since late March.[49]

On July 13, Trump said the US would control the strait and would charge ships up to 20% toll for safe passage, a reversal of the previous US position that no country was allowed to charge tolls through the international waterway under the rules of freedom of navigation. The US Secretary of State, Rubio, had strongly objected to Iran’s plan to impose fees. It is also illegal according to international law.

Iran and the US are now almost halfway through the 60 days set out in the MoU, which was meant to provide room for negotiations toward a final truce. The two sides had made little progress on key matters such as the strait, Iran’s disputed nuclear program, and regional issues.

Last month, Lebanon and Israel announced they had reached a “framework agreement” under which Israeli troops would withdraw from “pilot areas” in south Lebanon. The Lebanese army would then enter those areas, with the promise that they would prevent Hezbollah from returning and continue to dismantle the armed group’s infrastructure there.

The negotiations are between the Lebanese government and Israel. Hezbollah is not a party to the talks. Hezbollah has repeatedly called on the government to stop the talks, framing the direct negotiations as a surrender. It is unclear how agreements from the talks would be implemented on the ground without Hezbollah’s cooperation.

Now in its fifth month, the Iran war continues to rage after the unraveling of a memorandum of understanding ?that was meant to stop the fighting and pave the way for a peace agreement.

Despite heavy blows to Iran's military since the start of ?the U.S. and Israeli campaign on February 28, Tehran keeps significant drone and missile capability and has attacked passing tankers as well ?as its Gulf neighbors.

The U.S. military has said its latest bombings have targeted Iranian air defense systems, coastal radar, missile, and drone sites, as well as ?small boats and other maritime assets.

The strikes could be seen as "shaping operations" that are degrading Iranian defenses in case the U.S. ?military was ordered to conduct more intensive operations in the future. This helps set the stage, if needed.

Earlier, the U.S. military planned to develop options for deploying U.S. troops along Iran's shoreline to secure the Strait better. At the time, officials said the Trump administration had also discussed sending ground forces ?to Iran's Kharg Island, the hub for 90% of Iran's oil exports. Such an operation would be risky since Iran could shower the island with missiles and drones from the mainland. Trump ?said on July 14 that he had ordered his military to avoid striking Iran's oil facilities during earlier strikes against Kharg Island. But he has left open the choice of taking the ?island. “If we ?degrade them far enough and deep enough back, I would do that," he said.[59]

Trump has also threatened to attack a site linked to Iran's nuclear program known as Pickaxe Mountain, a fortified facility buried deep underground near one of Tehran's main nuclear sites.

Trump's willingness to publicly discuss military options, such as seizing Kharg Island, was a double-edged sword.

It could aid diplomacy by putting the Iranians on ?edge. But it's bad for the military because ?the US is telling its war aims.

Recent waves of U.S. strikes on Iran aimed at ?forcing open the Strait of Hormuz are also targeting Iranian military capabilities the U.S. would want to destroy before executing more complex operations against ?Iran, three U.S. officials said.

The strikes effectively strengthen more military options for President Donald Trump, who has kept the world guessing about his next steps after letting Congress know earlier of a formal resumption of conflict with Iran.

Critics of Trump's war with Iran, including within the U.S. Congress, say that while it achieved tactical victories that destroyed big swathes of Iran's conventional military and defense industrial base, it failed strategically to win ?concessions from Tehran.[60]

It also prompted Iran to exert unprecedented leverage over the Strait of Hormuz, a critical chokepoint for a ?fifth of the ?world's crude output. Even if its conventional navy were largely destroyed, it could still attack commercial vessels using capabilities like drones and rockets.

That has led to a debate within the Trump administration about the best way forward. Defense Secretary Hegseth has been an advocate of escalating the military operation against ?Iran.

Apparently, Trump's sweeping comments in recent days ?on Iran appeared to be aimed at pressuring Iran in negotiations and keeping Tehran unsure about his military's next steps. However, it is most likely that.

The discussions between him ?and his national security team look a bit different than what he's posting online.[61]

https://www.theguardian.com/world/2026/jul/16/us-attacks-oil-tanker-strait-of-hormuz-iran-tehran-strikes

On  July 16, Iran and the US exchanged intensified fire in a week-long escalation that has all but torn up last month's truce, but Iran's release of a US citizen was seen as signaling ?a path to avert the resumption of all-out war. For the first time since a MoU paused fighting in June, the US launched two big waves of air strikes ?in one day on July 15, mostly on targets near the coast in southern Iran. Iran responded with missiles and drones fired at US military bases in neighboring countries, including a major barrage at a recently expanded air base in Jordan.

The week of increasingly intense fire has assessed the limits of escalation that both sides set during four months of fighting before last month's truce. But in the midst of the attacks, Trump hailed the release of a US citizen in Iran as a "gesture of goodwill". Over decades of confrontation, the release of US citizens held in Iran has been managed through behind-the-scenes contacts that persisted when formal diplomacy was cut off.[62]

The ?re-escalation has once again nearly halted traffic through the Strait of Hormuz, sending global energy prices shooting higher. But prices are still well below wartime peaks, suggesting traders ?expect the crisis could abate.

Iran triggered the renewed fighting earlier by striking ships using a corridor in the strait outside its control, including a drone attack that caused a dangerous fire on board a Qatari tanker filled with liquefied natural ?gas.

Iran looked to show its authority over the Strait. But having made that point, Tehran is not keen on a wider escalation that would torpedo the June MoU, which it still regards as giving it most of what it looked for. Trump has declared the ceasefire under the MoU "over".

Within Iran, the renewed bombing has left residents anxious, following huge week-long memorial events for slain Supreme Leader Ayatollah Ali Khamenei that the authorities depicted as a demonstration of victory and national solidarity. The people are exhausted from war. [63]

Meanwhile, Iran wants all ships using the Strait of Hormuz to travel only through a channel close to its shores and intends to charge passage fees at the end of a 60-day negotiation period set in last month's memorandum. The US has encouraged ships to use an alternative southern route along the Omani coast, without coordinating with Iran. Since the very recent flare-up, Iran had declared the Strait closed. The US responded by reimposing its own blockade of Iran's ports from July 15, including firing at an empty tanker in the strait it said was bound for Iran. The US military fired missiles into the tanker near Iran's Kharg Island after it ignored warnings. The airstrikes had hit Iranian military targets along the coast to impede its ability to control the strait. But Iran, which can ?hit ships with missiles and drones from afar, says its ?grip does not rely on such coastal bases.

"The ?Americans thought that by attacking some of our bases on the southern coasts of the country, they could take control of this strategic strait," military spokesperson Brigadier General Akraminia said on July 16. Iran can "exert control over the Strait of Hormuz from every single point of its territory," he added.

Apparently,  the U.S. strikes could also ?serve as "shaping operations", giving Trump more options by targeting Iranian military capabilities that the US would want to have destroyed before taking bigger steps. This helps set the ?stage, if needed. Trump has not ruled out the possibility of using ground forces, including to seize Kharg Island, the site of Iran's main oil export terminal. He has repeated threats to hit Iranian power plants and bridges next week unless Tehran resumes negotiations. Akraminia said that if Trump conducted that threat, Iran's armed forces would strike "all remaining infrastructure" across the region, and the response would be more severe, wider in scope, and more destructive than earlier attacks.

For now, Iran's retaliatory strikes have been focused on ?US bases in ?neighboring countries. Iran said on July 16 that it had targeted US bases in Kuwait and Jordan, including an air base in Jordan that the US ?had upgraded in recent years into a regional headquarters. It said the Jordanian base had been used to launch attacks on Iran, including one that struck a target in the city of Ahvaz, causing damage to a nearby children's cancer hospital that had to be evacuated.[64]

On July 16, Iran asked Yemen’s Houthi movement to stand ready to close the Red Sea oil route if the United States strikes Iranian power infrastructure. The idea has been discussed within the Islamic Republic's leadership, and the message has been conveyed to Iran's Houthi allies. The Houthis had been informed recently of Tehran's request, and the group had completed preparations to attack shipping by deploying missiles and drones ?near the Bab el-Mandeb Strait, the gateway to the Red Sea, in Yemen's highlands overlooking Hodeidah and the Gulf of Aden, and was awaiting the ?order to begin. Any threat to the Red Sea and its Bab el-Mandeb gateway risks hugely worsening the global energy crisis triggered by Iran's closure of the Strait of Hormuz and underscores the explosive ?risks stemming from a new round of warfare.

With the Hormuz Strait already shut, any Houthi attacks on vessels or ports in the Red Sea would leave the Middle East's two main oil export ?routes disrupted simultaneously, opening a new front in both the energy crisis and Iran's wider conflict with the United States.[65]

The IRGC officials who are already in Yemen will control the decision on when to close the Bab el-Mandeb Strait, said the source close to the Houthis.

In a sign of escalating tensions in the region, the Houthis fired missiles at Saudi Arabia after accusing the kingdom of bombing an airport under ?their control on July 13, breaking a four-year truce in the conflict between the kingdom and the group. The flare-up between ?the Houthis and Saudi Arabia had come at an inconvenient time.

If fighting intensifies and spills over into the Red Sea's export infrastructure and shipping, it will threaten the only major alternative route for oil exports from the region.

Saudi Arabia was taking threats from Iran and the Houthis very seriously, adding that Riyadh was aware the Yemeni group was now closely coordinating with Iran over the Red Sea.[66]

A significant amount of Gulf oil has since been diverted to the Red Sea via a Saudi pipeline, and the waterway now carries around 7% of global energy supplies.

When the Houthis attacked shipping during the Gaza war, major shipping companies diverted their cargoes to the much longer, more expensive route around Africa.

With Saudi Arabia having diverted 70% of its energy exports through its Red Sea port of Yanbu, any direct attacks there would also pose a major problem for oil markets.

One of the regional ?sources said Iran's clerical rulers were seeking to pressure the United States by raising the potential cost to the global economy, threatening Red Sea shipping and the flow of Saudi oil exports through the waterway, in what the source described as part of "Iranian thinking."

Closing down the strait would not be difficult, the source said, adding: "Anybody with a firing rifle can interrupt the shipping. You don't have to have sophisticated ?missiles to ?interrupt the shipping."

Iran views the Houthis as part of its regional "Axis of Resistance", an alliance that also includes Lebanon's ?Hezbollah and Iraqi Shi'ite armed groups that have already joined the regional conflict between Tehran and Washington.

But the Houthi rebels have not formally entered the fray.

The United States says Iran has provided the Houthis with weapons, funding, and training, including ?support channeled through Hezbollah. Tehran has denied the accusation.

The conflict began on February 28, when Israel and the United States attacked Iran, leading Tehran to shut the Strait of Hormuz, the main route before the war for around a fifth of global energy supplies.

Tensions have mounted since a fragile June truce between Tehran and Washington collapsed, reviving fears of full-scale war and disrupting energy flows through the Strait.[67]

The attacks threaten efforts to reopen the Strait of Hormuz. Iran in effect closed the Strait during the four-month war with the US, and the US imposed a naval blockade of Iranian ships in response. A MoU between the two countries was supposed to reopen the strait, but flare-ups in violence and breakdowns in negotiations have hindered free navigation in the waterway.

Given the recent tensions, a wider regional war once again appears on the horizon. Undoubtedly, the US was reacting to Iranian claims of having gained strategic control of the Strait of Hormuz and is unlikely to give it up that easily. Notwithstanding US opposition, Iran will continue to use its newfound leverage over the strait and demand that all commercial shipping pay transit fees, which seems like a fait accompli for now, and the US will also continue to oppose them. The US cannot simply accept Iranian control of the Strait of Hormuz, which would appear as a major strategic and diplomatic defeat. Thus, the stalemate shall continue. Given the record, the Iranians are convinced that the US can no longer be a trustworthy partner in any peace talks. Given the increasing deep mistrust between the US and Iran, and the stalemate on the Lebanon issue, the peace talks appear to be stalled for now. However, Pakistan's mediation efforts continue as before but are under significant strain. The biggest problem is the development of unintended consequences, as before, when Iran gained strategic leverage over the Strait of Hormuz. A miscalculation on one side can prompt the other side to respond more forcefully. The single biggest challenge is still the elevated level of mistrust between Iran and the US-Israel alliance. Since both Iran and the US no longer trust each other, the earlier glimmer of hope is fading fast. Meanwhile, Israel continues with its aggressions in the region, although it is losing influence inside the US, as already done elsewhere in the world. Most importantly, given the high political costs and the eventual sheer exhaustion in both Iran and the US, and the working of diplomatic channels quietly behind the scenes, the war will eventually have to end, as all wars do. Strong political compulsions from all sides will force the US and Iran to reluctantly compromise for the sake of a permanent peace deal ending the five-month devastating war. However, it won’t happen anytime soon, and that is the real tragedy of the war. A prohibitive cost of the war will be borne by the region and beyond. This was an American war of choice, and it solely bears responsibility for the outcome. Iran also shares some blame for provoking the latest round. Eventually, the war will end, but not anytime soon. We wish it were otherwise.

Dr. Sohail Mahmood is a political analyst based in Chapel Hill, NC.

[1] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026”, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[2] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[3] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026”, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[4] Humeyra Pamuk, Dave Graham and Tala Ramadan “US and Iran conclude high-level talks in Switzerland, mediators say”, Reuters, June 22, 2026, https://www.reuters.com/world/asia-pacific/us-iran-talks-go-into-day-2-after-trump-threats-hormuz-closure-2026-06-22/

[5] What did the US and Iran agree to on the first day of talks? Al Jazeera, June 22, 2026, https://www.aljazeera.com/news/liveblog/2026/6/22/iran-war-live-first-day-of-us-talks-covers-lebanon-hormuz-frozen-assets, Here's the latest, CNN, June 22, 2026, https://edition.cnn.com/2026/06/22/world/live-news/iran-war-trump-israel-lebanon-hnk and Humeyra Pamuk, Dave Graham and Tala Ramadan “US and Iran conclude high-level talks in Switzerland, mediators say”, Reuters, June 22, 2026, https://www.reuters.com/world/asia-pacific/us-iran-talks-go-into-day-2-after-trump-threats-hormuz-closure-2026-06-22/ and “Iran says ‘important steps’ agreed for final-deal negotiations following Switzerland talks”, Reuters/Web DeskJune 22, 2026, https://tribune.com.pk/story/2614513/us-and-iran-conclude-high-level-talks-in-switzerland-mediators-say

[6] Osama Bin Javaid, A lot of work remaining to be done’ in Switzerland, Al Jazeera, June 22, 2026,https://www.aljazeera.com/news/liveblog/2026/6/22/iran-war-live-first-day-of-us-talks-covers-lebanon-hormuz-frozen-assets

[7] Humeyra Pamuk, Dave Graham and Tala Ramadan “US and Iran conclude high-level talks in Switzerland, mediators say”, Reuters, June 22, 2026, https://www.reuters.com/world/asia-pacific/us-iran-talks-go-into-day-2-after-trump-threats-hormuz-closure-2026-06-22/

[8] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026”, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[9] Iran says, ‘important steps’ agreed for final-deal negotiations following Switzerland talks”, Reuters/Web Desk, June 22, 2026, https://tribune.com.pk/story/2614513/us-and-iran-conclude-high-level-talks-in-switzerland-mediators-say

[10] “Iran says ‘important steps’ agreed for final-deal negotiations following Switzerland talks”, Reuters/Web Desk, June 22, 2026, https://tribune.com.pk/story/2614513/us-and-iran-conclude-high-level-talks-in-switzerland-mediators-say

[11] Maia Davies, Mallory Moench, First round of US-Iran talks ends with encouraging progress, mediators say”, BBC, June 22, 2026, https://www.bbc.com/news/articles/cwy0q41v1lzo

[12] Maia Davies, Mallory Moench, First round of US-Iran talks ends with encouraging progress, mediators say”, BBC, June 22, 2026, https://www.bbc.com/news/articles/cwy0q41v1lzo

[13] Humeyra Pamuk, Dave Graham and Tala Ramadan, “Vance says US-Iran talks lay 'good foundation' for final peace deal”, Reuters, June 22, 2026, https://www.reuters.com/world/asia-pacific/us-iran-talks-go-into-day-2-after-trump-threats-hormuz-closure-2026-06-22/

[14] Humeyra Pamuk, Dave Graham and Tala Ramadan, “Vance says US-Iran talks lay 'good foundation' for final peace deal”, Reuters, June 22, 2026, https://www.reuters.com/world/asia-pacific/us-iran-talks-go-into-day-2-after-trump-threats-hormuz-closure-2026-06-22/

[15] Humeyra Pamuk, Dave Graham and Tala Ramadan, “Vance says US-Iran talks lay 'good foundation' for final peace deal”, Reuters, June 22, 2026, https://www.reuters.com/world/asia-pacific/us-iran-talks-go-into-day-2-after-trump-threats-hormuz-closure-2026-06-22/

[16] Oil price falls back to pre-Iran war levels, BBC, June 25, 2026, https://www.bbc.com/news/articles/c0jy7d7wzv4o

[17] Oil price falls back to pre-Iran war levels, BBC, June 25, 2026, https://www.bbc.com/news/articles/c0jy7d7wzv4o

[18] Oil price falls back to pre-Iran war levels, BBC, June 25, 2026, https://www.bbc.com/news/articles/c0jy7d7wzv4o

[19] Helene CooperEuan WardJenny Gross, and Pranav Baskar, “U.S. Strikes Iran in Retaliation for Attack on Vessel in Strait of Hormuz”, New York Times, June 26, 2026, https://www.nytimes.com/live/2026/06/27/world/us-iran-strikes-hormuz and

Alexander Ward, Benoit Faucon, and Rebecca Feng,  “U.S. Launches Fresh Attacks on Iran”, Wall Street Journal, June 26, 2026

https://www.wsj.com/world/middle-east/trump-says-iranian-attack-on-cargo-ship-was-violation-of-ceasefire-deal-884c617c?mod=hp_lead_pos1

[20] Helene Cooper, Euan Ward, Jenny Gross, and Pranav Baskar, “U.S. Strikes Iran in Retaliation for Attack on Vessel in Strait of Hormuz”, New York Times, June 26, 2026, https://www.nytimes.com/live/2026/06/27/world/us-iran-strikes-hormuz

[21] Ibid

[22] Ibid

[23] Andrew Mills and Elwelly, “Iran says it won't meet with U.S. envoys, clouding prospects for peace deal”, Reuters, June 30, 2026, https://www.reuters.com/world/middle-east/uncertainty-over-qatar-diplomacy-clouds-prospects-us-iran-deal-2026-06-30/

[24] Ibid

[25] Ibid

[26] Patrick Wintour, “US-Iran talks over $6bn Iranian assets to restart”, Guardian, July 1, 2026, https://www.theguardian.com/world/2026/jun/30/us-iran-talks-6bn-iranian-assets-restart

[27] Ibid

[28] Ibid

[29] Iran’s Diverging Priorities Are Jeopardizing U.S. Peace Talks”, WSJ, June 30. 2026, https://www.wsj.com/world/middle-east/irans-diverging-priorities-are-jeopardizing-u-s-peace-talks-a1aca6ad

[30] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[31] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[32] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[33] Maziar Motamedi,” What is Iran looking for in any upcoming talks with the US?”, , Al Jazeera, June 30, 2026, https://www.aljazeera.com/news/2026/6/30/what-is-iran-looking-for-in-any-upcoming-talks-with-the-us

[34] Ibid

[35] Andrew Mills and Ahmed Elimam, “US and Iran enter technical talks to secure peace deal, shipping restart”

  Reuters, July 1, 2026, https://www.reuters.com/world/asia-pacific/us-iran-enter-technical-talks-secure-peace-deal-restart-shipping-2026-07-01/

[36] Ibid

[37] US-Iran negotiations: What’s the latest? Al Jazeera, July 1, 2026, https://www.aljazeera.com/news/2026/7/1/us-iran-negotiations-whats-the-latest

[38] Ibid

[39] Ibid

[40] Ibid

[41] Maziar Motamedi,b “What is Iran looking for in any upcoming talks with the US?”, Al Jazeera, June 30, 2026, https://www.aljazeera.com/news/2026/6/30/what-is-iran-looking-for-in-any-upcoming-talks-with-the-us

[42] Andrew Mills and Elwelly, “Iran says it won't meet with U.S. envoys, clouding prospects for peace deal”, Reuters, June 30, 2026, https://www.reuters.com/world/middle-east/uncertainty-over-qatar-diplomacy-clouds-prospects-us-iran-deal-2026-06-30/

[43] Maziar Motamedi, “What is Iran looking for in any upcoming talks with the US?”, Al Jazeera, June 30, 2026, https://www.aljazeera.com/news/2026/6/30/what-is-iran-looking-for-in-any-upcoming-talks-with-the-us

[44] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[45] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026”, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[46] Bernd Debusmann, “What's in the US-Iran agreement?, BBC, June 18, 2026, https://www.bbc.com/news/articles/cvgmqzr6p9mo

[47] Maia Davies, Mallory Moench, First round of US-Iran talks ends with encouraging progress, mediators say”, BBC, June 22, 2026, https://www.bbc.com/news/articles/cwy0q41v1lzo

[48] Maia Davies, Mallory Moench, First round of US-Iran talks ends with encouraging progress, mediators say”, BBC, June 22, 2026, https://www.bbc.com/news/articles/cwy0q41v1lzo

[49] Samia Nakhoul, “Israel-Lebanon deal may entrench stalemate rather than end war, analysts say”, Reuters, June 29, 2026

[50] Ibid

[51] Ibid

[52] Ibid

[53] Ibid

[54], David M. Halbfinger, “Israelis See Their Friendship With the U.S. Slipping Away”, New York Times, June 27, 2026, https://www.nytimes.com/2026/06/27/world/middleeast/israel-new-york-iran-war-mamdani.html 

[55] Ibid

[56] Ibid

[57] https://www.nytimes.com/live/2026/06/27/world/us-iran-strikes-hormuz

[58] US-Iran negotiations: What’s the latest? Al Jazeera, July 1, 2026, https://www.aljazeera.com/news/2026/7/1/us-iran-negotiations-whats-the-latest

[59] Phil Stewart and Idrees Ali, “US strikes on Iran strengthen Trump's options for new escalation, officials say,” July 15, 2026, https://www.reuters.com/world/middle-east/us-strikes-iran-strengthen-trumps-options-new-escalation-officials-say-2026-07-15/

[60] Ibid

[61] Ibid

[62] Nayera Abdallah and Jana Choukeir, “American signals path to climb down,” Reuters, July 16, 2026, https://www.reuters.com/world/iran-warns-strait-hormuz-is-red-line-will-resist-until-end-2026-07-16/

[63] Ibid

[64] Ibid

[65] Parisa Hafezi, Samia Nakhoul and Jonathan Saul, “Iran tells Houthis to close Red Sea gateway if US hits power network, sources say” Reuters, July 16, 2026, https://www.reuters.com/world/middle-east/iran-tells-houthis-close-red-sea-gateway-if-us-hits-power-network-sources-say-2026-07-16/

[66] Ibid

[67] Ibid