US-Iran Ceasefire Under Strain as Strikes and Counter Strikes Begin

Even though the battle around Hormuz is raging, with Iran attacking ships seeking to cross it and the US attacking the Iranian positions around the Strait, the overall ceasefire is still holding. With the latest round of strikes at Iranian targets near the Strait of Hormuz, the ceasefire between Iran and the US may be spiralling towards a breaking point. The strikes were in response to an Iranian attack on a Cyprus-flagged commercial cargo ship that was badly damaged. A crew of ten Indians were evacuated, but one sailor is still missing. Iran retaliated to the US attacks by launching drones and missiles at Bahrain, Qatar, the UAE, Jordan and Oman. Even as the US demanded on Friday that Iran enable safe passage through the Strait, Teheran declared on Saturday that the Strait will be “closed until further notice.” Illustration: Pariplab Chakraborty. Even though the battle around Hormuz is raging, with Iran attacking ships seeking to cross it and the US attacking the Iranian positions around the Strait, the overall ceasefire is still holding. At this stage it is worth going back to the Islamabad Memorandum of Understanding (MoU) that has provided for a temporary ceasefire for 60 days in which Iran and the US are to negotiate a number of key issues. The MoU has provisions that would kick in after the 60 days of negotiations and others that were to become operational immediately. The big point of contention is that of traffic in Hormuz. Under clause 4, the US was to withdraw its naval blockade within 30 days and Iran was to reopen Hormuz without charge for “60 days only” and demine the strait in 30 days. Further, the US was to provide waivers for the exports of Iranian crude. Now Iran is very clearly seeking to establish its control over the Strait and Teheran is now saying that it may seek an amendment to Clause 5 of the MoU which says that the future administration of the Strait would be decided through dialogue between Oman and Iran. But even as we approach the half-way mark for the limits of the ceasefire and negotiations by the MoU, bigger issues, such as the status of Iran’s nuclear programme have yet to be taken up, as is the question of unfreezing Iran’s assets abroad. The ceasefire, therefore, should not be mistaken for a settlement. Rather, it is a pause in a confrontation whose underlying strategic disagreements remain unresolved, primary among these being the status of the Strait of Hormuz. Also read: Indian Sailor Dead, Six Injured in Iran Attack on Tankers Crossing Hormuz The current levels of fighting suggest that neither Washington nor Tehran currently seeks an uncontrolled regional war, even though both continue to signal resolve through military deployments, economic pressure and uncompromising rhetoric. But five days ago, the US revoked the 60-day sanctions waiver that allowed Iranian oil sales following an attack on three commercial tankers in the strait. US President Donald Trump declared last week, “I think it’s [the ceasefire is] over. I don’t want to deal with them anymore, they’re scum.” Yet in the same breath he suggested that American negotiators could continue talks “if they want,” while dismissing the exercise as “a waste of time.” The contradictory messaging captures the current state of US policy: military pressure remains the preferred instrument, but diplomacy has not been entirely abandoned. For now, both sides appear to be managing the confrontation in a way that leaves open the possibility of returning to negotiations around the Islamabad MoU. Military friction remains concentrated around the Strait of Hormuz, while Iranian retaliation has extended to American facilities in the region including Jordan and Oman. Also read: Trump: US Will Blockade Iran in Strait of Hormuz, Charge Ships for Safe Passage Israel, meanwhile, has shown a measure of restraint though desultory fighting in Lebanon continues. It remains unclear whether this reflects its own strategic calculations or pressure from Washington to avoid broadening the conflict. The central question has not changed: what exactly does the United States seek to achieve in the Gulf? Much of the current American rhetoric suggests an expectation that Iran should negotiate from the position of a defeated adversary, accepting terms that amount to strategic surrender. Such expectations may satisfy domestic political narratives, but they bear little resemblance to the military and political realities confronting either side. This approach sits uneasily alongside the more practical framework embodied in the Islamabad MoU, whose provisions were accepted, at least in principle, by both parties. That agreement offers a pathway towards incremental confidence-building and de-escalation rather than outright capitulation. The difficulty for Washington is that coercion has clear limits. As long as the United States remains unwilling to commit substantial American ground forces to the region – a prospect for which there is little political appetite – it is difficult to see how military pressure alone can compel Iran to accept Washington’s maximalist demands. Air strikes, naval deployments and sanctions can impose costs, but they cannot by themselves produce political compliance if the opposing leadership concludes that resistance remains preferable to concession. Also read: 'Imagine How Palestinians Feel Every Day': Ro Khanna After Detention By Settlers, IDF Indeed, history suggests that sustained military pressure often strengthens rather than weakens the resolve of governments that perceive themselves to be fighting for regime survival. Tehran’s leadership has consistently interpreted external pressure through precisely that lens. From Iran’s perspective, concession in Hormuz is not an option. The leadership believes that, despite the effectiveness of the initial phase of the US-Israeli air campaign, it retains important military and strategic flexibility and control over the Strait provides Teheran with an effective deterrent. Recent events have almost certainly reinforced the conclusion in Teheran that another military confrontation with the United States and Israel is only a matter of time. Under those circumstances, relinquishing the strategic tools that provide deterrence would appear irrational from the Iranian perspective. The very capabilities Washington seeks to eliminate are viewed in Tehran as essential insurance against future conflict. Importantly, Iranian decision-makers continue to possess escalation options that extend well beyond their own territory. Among these is the ability to encourage the Houthis to intensify operations against shipping through the Bab el-Mandeb Strait. Combined with renewed disruption in the Strait of Hormuz, such a strategy would threaten two of the world’s most important maritime energy corridors simultaneously. Even limited interference with commercial shipping could produce significant increases in global oil prices, disrupt supply chains and place renewed inflationary pressure on the international economy. Energy markets, in other words, remain one of Iran’s most important sources of strategic leverage despite years of sanctions. This reality also complicates the calculations of America’s regional partners. Gulf Arab states have little interest in becoming the principal battleground of an extended US-Iran confrontation. Their economies depend upon stable energy exports, secure shipping lanes and continued foreign investment. While they share concerns about Iranian regional influence, they are equally wary of a conflict that could devastate their own economic interests. As for now, we stand at the brink of another spiral of escalation where Iran blocks the Hormuz and the United States reinstates its blockade on Iran. Both sides enter into a battle attrition with the world economy going for a six. The ceasefire itself may survive for some time. But unless Washington is prepared to align its objectives with what military pressure can realistically achieve – or unless both sides return seriously to the negotiating framework already available – the region is likely to experience repeated cycles of escalation and uneasy calm. The choice facing policymakers is no longer between pressure and diplomacy. It is between managing an unstable deterrence indefinitely or constructing a political framework capable of addressing the security concerns of both sides. Manoj Joshi is a distinguished fellow with the Observer Research Foundation in Delhi. This piece was first published on The India Cable – a premium newsletter from The Wire – and has been updated and republished here. To subscribe to The India Cable, click . This article went live on July fourteenth, two thousand twenty six, at forty-nine minutes past ten in the morning. The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.