Three weeks ago, the United States and Iran announced what was supposed to be a diplomatic breakthrough. This week, they were back to trading military strikes.
US forces launched a fresh wave of attacks on Iranian targets after Washington blamed Tehran for attacks on commercial vessels in the Strait of Hormuz. Iran responded with missile and drone attacks on US military facilities in Bahrain and Kuwait, while President Donald Trump declared the June 17 agreement “over” and warned that future strikes could be “much, much worse”.
The rapid collapse of what had been presented as a pathway towards de-escalation has rattled oil markets, renewed fears about the security of one of the world’s most important shipping routes and raised fresh questions about whether the Middle East is heading towards another prolonged conflict.
Brent crude has climbed back towards the $80-a-barrel mark as traders assess the risk of further disruption in the Gulf.
The obvious question on everyone’s mind is: What happened? How did an agreement that was supposed to stop the fighting unravel in less than a month?
A DEAL BUILT ON UNRESOLVED DISPUTES
The first thing to understand is that the June 17 agreement was never a peace treaty.
The memorandum of understanding signed by Washington and Tehran was designed to halt immediate hostilities, reopen the Strait of Hormuz, ease some sanctions and create a 60-day window for negotiations on much bigger issues, including Iran’s nuclear programme, regional security and the future of US-Iran relations.
In essence, the temporary deal bought time, but it did not eliminate the reasons the two countries were fighting in the first place.
For a brief period, however, it appeared to be working. Shipping traffic resumed, oil markets stabilised and both sides publicly talked about diplomacy.
ONE DEAL, TWO VERY DIFFERENT EXPECTATIONS
One reason the agreement unravelled so quickly is that the two sides appear to have viewed it very differently.
The Trump administration saw the arrangement primarily as a mechanism for restoring stability. The immediate objective was to stop attacks on commercial shipping, reduce tensions in the Gulf and prevent a wider regional conflict.
Iran, meanwhile, viewed the agreement as the start of a broader diplomatic process that could eventually lead to sanctions relief, stronger oil exports and negotiations on its long-term role in the region.
What looked like a shared understanding was anything but. Washington believed it had secured calm. Tehran believed it had secured leverage for future negotiations.
The problem was that Washington and Tehran were never fully aligned on what the deal actually meant.
THE HORMUZ FLASHPOINT
The June agreement was supposed to reduce tensions in the Strait of Hormuz, one of the world’s busiest and most important shipping routes.
Instead, the critical waterway has again become the centre of the crisis.
Several commercial vessels came under attack while passing through Hormuz, raising fresh concerns about maritime security and global oil supplies.
Washington blamed Iran for the attacks and argued that they undermined the agreement signed just weeks earlier. Tehran denied responsibility and accused the United States of using the incidents as a justification for renewed military pressure.
But the damage had already been done.
One of the main reasons the two sides agreed to pause hostilities was to make shipping through Hormuz safer. When commercial vessels started coming under attack again, questions quickly emerged about whether the agreement was working at all.
For the Trump administration, the attacks raised serious doubts about the agreement. If commercial shipping was still under threat, officials argued, then the deal was failing to deliver on one of its most important promises.
FRAGILE DIPLOMACY
The Trump administration responded by revoking key concessions linked to the agreement and authorising a new round of military action.
US Central Command said it struck more than 90 targets across Iranincluding air defence systems, command networks, coastal radar installations and anti-ship missile capabilities. The Pentagon said the objective was to impose “heavy costs” on Iran for targeting commercial shipping.
Iran retaliated by launching missile and drone attacks on US military facilities in Bahrain and Kuwait, further escalating tensions across the Gulf. Air defence systems were activated and regional governments urged caution as fears of a wider confrontation grew.
The exchange of strikes effectively ended any remaining illusion that the June agreement was still functioning.
BLAME GAME OVER DEAL
The military escalation was accompanied by an equally dramatic shift in rhetoric. Speaking ahead of the NATO summit in Ankara, Trump said the agreement was finished.
“I think it’s over,” he told reporters.
He later referred to Iranian leaders as “scum”, “dishonourable people” and “sick people”arguing that further negotiations were pointless. He also warned that future US action would be significantly tougher if attacks on shipping continued.
The language marked a sharp departure from the cautious optimism that surrounded the June agreement.
Within weeks, a deal that had been presented as a diplomatic breakthrough had turned back into a military confrontation.
Tehran sees the story very differently. Iranian Foreign Minister Abbas Araghchi and other senior officials argue that the United States undermined the agreement by reinstating sanctions, threatening further attacks and ultimately launching new strikes.
Iran’s leadership insists diplomacy cannot succeed if negotiations are accompanied by military pressure. Senior Iranian officials have accused Washington of violating the agreement first and argue that Tehran was responding to American actions rather than provoking the crisis.
As a result, both sides now accuse the other of destroying the deal.
That may be the clearest indication of how completely the diplomatic process has broken down.
ENERGY CRISIS BACK IN FOCUS
The consequences extend far beyond Washington and Tehran.
The Strait of Hormuz remains one of the world’s most important energy chokepoints. Any disruption there can quickly affect oil prices, shipping costs and inflation around the globe.
That is why markets reacted immediately to the latest escalation. Investors are trying to assess whether the fighting will remain limited or evolve into a broader regional conflict that threatens energy supplies.
For India, which imports more than 85% of its crude oil requirements, the stakes are particularly high. Sustained increases in oil prices can widen the trade deficit, pressure the rupee and complicate the inflation outlook.
WILL THERE BE FURTHER ESCALATION?
Not necessarily. Despite the exchange of strikes, neither Washington nor Tehran appears eager for a direct, prolonged war.
The United States says its immediate objective is reopening the Strait of Hormuz and restoring freedom of navigation through one of the world’s most important shipping routes. Iran, meanwhile, insists the waterway will reopen on its own terms and has warned against further military pressure.
Yet the latest signals from Washington suggest the crisis may not end anytime soon.
US Central Command has indicated that the latest round of strikes is complete, but stressed that American forces remain “vigilant, lethal and prepared” for further operations.
At the same time, Axios reported that the White House is preparing for what could become a multi-day or even multi-week military campaign focused on the Strait of Hormuz. According to the report, reopening the waterway has become the administration’s primary military objective.
Vice President JD Vance has also signalled that Washington is prepared for a prolonged confrontation if necessary.
“If they try to close the Strait of Hormuz, there’s going to be a response from the American military,” Vance said, adding that US strikes would continue until ships could move freely through the waterway.
And yet, even as military preparations intensify, Trump has suggested diplomacy may not be completely dead. Speaking aboard Air Force One, he said Iranian officials had recently reached out and “want to make a deal”.
That contradiction captures the current moment better than anything else.
Washington is preparing for the possibility of a longer military campaign while leaving the door open for negotiations. Tehran is threatening retaliation while signalling it is still willing to talk.
Whether the next chapter is diplomacy or escalation may depend on what happens in the Strait of Hormuz over the coming days.
The bigger lesson from the past three weeks is that the June 17 agreement never resolved the underlying dispute between the two countries. It merely paused it.
The deal bought time. It did not solve the problem.
Now the missiles are flying again, oil markets are on edge and the world is once again watching two long-time adversaries edge towards another crisis.
– Ends
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