Renewed tensions between the US and Iran are causing setbacks to the temporary agreement reached in June, highlighting deep disagreements over the Strait of Hormuz and other critical issues, and illustrating the challenges in achieving a durable peace. The 14-point Islamabad Memorandum of Understanding (MoU) aimed to end hostilities and keep the Strait of Hormuz open for commercial ships. However, analysts note the language was ambiguous on key matters and left difficult issues—particularly Iran’s nuclear program—for further negotiations.
Recent statements about the deal:
Last week, US President Donald Trump declared the ceasefire agreement “over,” accusing Iranian officials of failing to honor negotiated commitments. He also suggested that the US might assume control of the Strait of Hormuz. Conversely, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei blamed Washington for destabilizing the MoU, claiming the US has repeatedly violated its commitments. Pakistan has called on all parties to honor their promises.
Issues in the Strait of Hormuz:
Following the outbreak of conflict, which began with US-Israeli strikes on Iran on February 28, Tehran effectively closed the Strait, a vital route through which about 20% of the world’s oil and liquefied natural gas are shipped. According to Article 5 of the MoU, commercial traffic was to resume immediately, with Iran making efforts to ensure the safe passage of vessels for 60 days without fees, from the Persian Gulf to the Sea of Oman and back. Iran interprets this as the US recognizing its authority to manage the entire waterway, free of tolls for two months. The US and Gulf nations dispute this, viewing the language as requiring Iran only to facilitate safe passage without exerting force or restrictions. The US has stated the Strait will remain toll-free. Recently, Iran has engaged in firing on vessels claiming they attempted to pass via unauthorized routes, and has again declared the Strait closed. Nonetheless, the US Navy reports that a southern route remains open and accommodates two-way traffic.
US oil waivers and Iranian assets:
Under Article 10, the US was to grant waivers enabling Iran to export crude oil and related products, including banking, insurance, and transportation services. This was seen as a significant benefit for Iran, which has faced years of economic pressure due to sanctions. However, on July 7, the US revoked a license allowing Iranian oil sales, condemning Iran’s actions in the Strait as “wholly unacceptable” and warning of consequences. Iran views this as a breach of the MoU.
Regarding frozen assets, Article 11 stipulated the US would make available Iran’s blocked funds, including about $6 billion held in Qatari accounts, with procedures to be agreed upon. Qatar announced on June 30 that it had not transferred these funds to Iran. Vice President JD Vance indicated that once unfrozen, the US and Qatar would control the funds, potentially using them for agricultural imports. Iran’s UN ambassador, Ali Bahreini, insisted Iran would solely decide how to utilize these assets.
Lebanon’s situation:
Iran’s parliamentary speaker and main negotiator Mohammad Bagher Ghalibaf accused Israel of violations in Lebanon, citing Israeli attacks related to Hezbollah’s actions in the region. Lebanon was drawn into the conflict after Hezbollah fired at Israel on March 2, prompting an Israeli military response and occupation in southern Lebanon. Iran has demanded Israel cease fire in Lebanon as part of the broader agreement.
Broader negotiations:
The MoU commits Washington and Tehran to negotiate a comprehensive deal within 60 days, extendable by mutual agreement. Yet, due to disputes over control of the Strait, no date has been set for further talks. Iran’s pursuit of a 2015 nuclear agreement with global powers took years; former US President Trump withdrew from that deal during his first term.
Expert Mohanad Hage Ali from the Carnegie Middle East Center stated, “The MoU is in crisis, and a secondary deal is needed to restore stability. The ambiguity reflects the complexity of the issues and the fragile nature of the agreement.”