The 60-day memorandum of understanding brokered by Pakistan in June lapsed on August 17 with no successor deal, no formal ceasefire and no scheduled talks.
US President Donald Trump told Al Jazeera on Tuesday he was “not in a hurry” for Iran to return to the table. Iran’s foreign ministry spokesperson Esmail Baqaei said the memorandum had applied only to the nuclear file, and the Islamic Revolutionary Guard Corps (IRGC) dismissed reports of a working backchannel as “fantasies”.
Tehran has not won sanctions relief, an end to the US naval blockade, or the return of its frozen funds. Axios reported that officials expect the expanded secondary sanctions to be the primary instrument at least until after the US midterm elections. Six months on, neither side has what it needs to call this war over. Washington has not broken the Iranian regime, has not verified what remains of Tehran’s stockpile of enriched uranium, and has not completely restored freedom of navigation through the Strait of Hormuz. Both hold cards. Both are depleted. The pillars that the negotiations rested on were the enrichment question and the frozen funds. Iran’s public posture is that the impasse is Washington’s problem to solve. The war’s opening premise by the US and Israel was that a decapitation strike and a bombing campaign would force Iran to capitulate. But the regime has held on, choked off one of the world’s key shipping trade routes and plunged the region into conflict. Iran’s reach into the Gulf and against US installations there was demonstrated in the war’s opening days, and has been shown repeatedly ever since. Gulf states have absorbed further strikes since the April ceasefire lapsed. At the same time, Iran’s proxies in Lebanon have withstood an Israeli onslaught. Iran’s largest instrument of leverage is the waterway through which about a fifth of the world’s seaborne oil normally moves. Traffic has never fully recovered since. The International Energy Agency has called the disruption among the largest in oil-market history. Among these were Indians too. Washington rejects any Iranian toll or approval regime. It hasn’t recovered to this level since. Control of Hormuz remains Iran’s biggest card at a negotiations table. Within nine days, the Assembly of Experts, meeting under wartime conditions, named his son Mojtaba Khamenei as the third supreme leader of the Islamic Republic. Mojtaba has kept an unusually low profile. No verified public appearances have been recorded, and there have been speculations about wounds sustained in the strike that killed his father. President Pezeshkian remains in office. The Majlis, under Speaker Mohammad Bagher Ghalibaf, has barred International Atomic Energy Agency (IAEA) access to struck sites and advanced legislation on withdrawal from the Nuclear Non-Proliferation Treaty and on criminalising communication with US and Israeli media. Analysts at Chatham House and other think tanks had argued that the strike campaign’s underlying bet was that decapitation would fracture the system. Six months on, it has not. But the administration did not sanction a major Chinese bank, the step widely seen as the toughest available. It also set no deadline for compliance. Iran has been struggling economically for a while. Arab states repeatedly struck have stopped short of formal alignment against Iran.
The June memorandum had promised a $300 billion-reconstruction and development package for Iran, the lifting of the US naval blockade within 30 days of a final deal, phased relief from secondary sanctions, and the unfreezing of Iranian assets held abroad. But the latest US sanctions targeting Iran – announced on August 24 – have moved the process in the other direction. A one-way attack drone struck a tactical operations centre at Port Shuaiba in Kuwait on March 1, killing six US Army Reserve soldiers in the first American combat deaths of the war. A ballistic missile penetrated defences at Al Udeid Air Base in Qatar on March 2. Bahrain and the UAE were hit in the opening 48 hours. In parallel, Iran-backed Houthis struck the Saudi-flagged bulk carrier Amzan off Yanbu on August 24, as a show of force that the grouping can disrupt shipping through another key corridor that goes through the Arabian Gulf. The US Energy Information Administration reported that flows of crude and petroleum liquids through Hormuz fell to 14.6 million barrels per day in the first quarter of 2026, from 20.4 million barrels per day a year earlier, a drop of nearly 30%. War-risk insurance premiums, which stood at about 0.25% of hull value before the war, had risen to between 7.5% and 10% by late July, according to Marcus Baker of Marsh, adding millions of dollars to the cost of each transit. The International Maritime Organization has tallied about 65 vessel incidents and 17 seafarer deaths tied to the campaign since February 28. Brent crude traded at about 66 dollars a barrel before the war. It spiked above 110 dollars in March, eased to about 93 dollars on August 20, and slipped below 87 dollars on August 27. Ayatollah Ali Khamenei, Iran’s supreme leader for more than three decades, was killed in a joint US-Israeli strike on a Tehran compound on February 28. US treasury secretary Scott Bessent announced on August 24 ‘Operation Economic Outcast’ against Iran. It is an expanded secondary-sanctions campaign that hit roughly 60 entities, individuals and vessels across digital assets, technology, gold, aviation and shipping, including some Chinese nationals. The UAE suspended all trade and financial dealings with Iran on August 19. Qatar has kept diplomatic channels open and mediated alongside Oman, whose deal on the Hormuz corridor was announced on August 26. A Saudi-led Red Sea maritime defence alliance became operational in mid-August with 13 to 15 signatories, though without the UAE or Oman. Regional realignment also includes a defence pact signed in Mecca on August 7 by Saudi Arabia, Turkey and Pakistan. It has no joint command, no standing forces and no released text, and the Atlantic Council has cautioned that it is not a Nato-style Article 5 arrangement, which lays down that members will come to the rescue if one of them is attacked.
President Masoud Pezeshkian, speaking at an Islamic unity conference in Tehran on Wednesday, said Iran “is not in a weak position”. A senior Iranian official quoted by state media on August 22 said Tehran would not return to talks under a sanctions campaign that the Trump administration deems “economic asphyxiation”. The IRGC declared the strait closed to shipping tied to “unfriendly nations” on March 2 and claimed “complete control” of the waterway on March 4. Iranian deputy foreign minister Kazem Gharibabadi said it was around 11km wide, with inbound traffic to be routed through Iranian waters and outbound traffic through Omani waters. An IRGC spokesperson said the two sides had agreed on “each country’s share of the strait’s waters as well as Iran and Oman’s share of its revenues”, reviving toll proposals earlier reported at 1 million to 2 million dollars per vessel. The IMO has warned that tolls on an international strait would set a “dangerous precedent”. Bessent likened the effort to D-Day and said its aim was Iran’s “economic asphyxiation”.
On Thursday, Iran and Oman announced a temporary shipping corridor.
The IAEA has had no on-site access to Iran’s enrichment facilities, though Tehran remains a party to the Non-Proliferation Treaty. In effect, the West cannot verify what survived the strikes, cannot strike again without knowing what it would be hitting, and cannot rule out a breakout dash for nuclear weapons. Whether that matters to the Trump administration is another question altogether. The campaign still exacts a toll on Iranian people. The pivot to economic warfare has come as US air-defence inventories run down. Defence secretary Pete Hegseth and Trump have disputed the reporting.
The last verified figure for Iran’s stockpile of uranium enriched to 60% stood at 440.9kg as of June 13, 2025, according to the agency’s September 2025 report. The International Monetary Fund’s July 2026 update projected a 5.4% contraction in Iranian GDP and 68.9% inflation for this year. The rial trades near 2 million to the dollar on the open market, against about 1.35 million at the start of the year, and the government has cut the subsidised petrol quota from 70 litres to 50 litres a month. Analysts Mark Cancian and Chris Park of the Center for Strategic and International Studies (CSIS) estimated that US Patriot inventory had fallen about 65%, from about 2,330 interceptors to between 759 and 827, and that THAAD stocks were down about 38%, to between 234 and 278. CSIS assessed that rebuilding Patriot stocks to pre-war levels will take until mid-2029, and that the US Army’s FY2027 order of THAAD interceptors will not complete replacement deliveries until the end of that decade.
Director general Rafael Grossi told the Swiss daily Le Temps in October 2025 that if Iran chose to enrich further it would have “enough material for roughly ten nuclear bombs”, while adding that “we have no evidence that Tehran intends to build one”. Grossi told Reuters in mid-November that satellite imagery showed no evidence of renewed enrichment and that activity near the damaged sites looked like damage assessment rather than centrifuge operation. Iranian foreign minister Abbas Araghchi has said Iran could “rethink” its NPT membership. Hardline voices in the Majlis, according to reports, have argued openly for withdrawal. Kerri Bitsoff, a former Treasury sanctions official, told Reuters last month: “Sanctions can’t topple a regime on their own; that’s not what they’re for. CNN reported on August 4 that “nearly 80 percent of interceptors for a key missile defence system”, identified as THAAD, had been depleted. Former defence secretary Leon Panetta called the shortage “poor planning”.
What next
And any tanker incident serious enough to move Brent back above 100 dollars a barrel could force Washington and its Gulf allies to choose between escalation and accommodation. Analysts say there are three possible thresholds that could move the deadlocked conflict. A US sanctions on a major Chinese bank would signal a decisive tightening of the economic campaign. An Iranian withdrawal from NPT would remove the last verification mechanism. For now, the war continues.
