The 60-day deadline that the US and Iran had set to reach a longer-term peace deal has expired with neither side giving ground on the big issues nor willing to extend the window for further negotiations.
When US President Donald Trump announced two months ago that his administration had reached an interim agreement with Iran to end the war and reopen the Strait of Hormuz, he sounded optimistic. “Ships of the world, start your engines. Let the oil flow!” he wrote.
But he has struck a very different tone in recent days, with the 60-day arrangement reaching an end and the two sides appearing to have reached an impasse. “There’s nobody to negotiate with,” he told a crowd in New York City on Friday.
He urged Americans to accept paying “a little bit more” for fuel and described the US blockade of Iranian ports as a “wall of steel”.
“Pretty soon I’ll be declaring the Hormuz strait a territory of the United States,” he said.
Kazem Gharibabadi, Iran’s Deputy Foreign Minister, responded on X, saying the waterway “was Iran’s, is Iran’s, and will remain Iran’s”.
Control of the strait, through which about a fifth of the world’s oil and gas supply flowed before the US and Israel attacked Iran on February 28, has emerged as the main sticking point.
The 14-point memorandum of understanding negotiated in Islamabad and signed on June 17 was intended as an interim framework for ending the war and a window for negotiations on a longer-term nuclear agreement that could be extended by mutual consent.
But Iran has not discussed extending the ceasefire with the US because Tehran does not consider the 60-day agreement to have begun, a senior Iranian source told Reuters last week.
The agreement began to unravel soon after it was signed, through a series of disputes over implementation and control of the Strait of Hormuz. The waterway became the fundamental issue in ending the conflict, while the nuclear issue was a can kicked down the road.
The two governments clearly had different interpretations of what they had actually agreed to.
"Why are we still hanging on to this 17 August date like it means something?" said political economist Nader Itayim.
"The MOU died weeks ago," he wrote on X.
There is a lot at stake for Mr Trump. He campaigned on a promise to lower energy costs. His Democratic rivals are seeking to make rising prices and the fallout from the war central issues in the November midterm elections, when control of the Senate is at stake.
When Mr Trump launched the war alongside Israel on February 28, he said it would last “four to five weeks”. He has frequently compared the war in Iran with the US operation in Venezuela in January, when President Nicolas Maduro was captured. He has argued that the economic and military pressure that brought Caracas to the negotiating table could force Tehran to do the same.
But Iran has proven to be considerably harder to pressure, particularly because of its ability to control the Strait of Hormuz. The conflict, now nearly six months old, has rattled markets and pushed up the cost of fuel, food and other goods.
The war, and Mr Trump’s handling of it, have also proven deeply unpopular among Americans, according to polls. They have undermined his central argument that his domestic and foreign policies would deliver an economic boom for ordinary Americans.
Meanwhile, Iran had pushed for Lebanon, where Israel is fighting the Tehran-backed Lebanese group Hezbollah, to be included as an integral part of the agreement, even though Israel is not officially a party to the interim arrangement.
On Sunday, 11 people were killed in Israeli strikes in Lebanon, including several children, further diminishing the prospects for a lasting ceasefire. Iran has long argued that Israeli strikes on Lebanon violate the interim agreement.
Though Iran’s economy has taken a major hit, with crude oil exports sharply curtailed by the US blockade, the US and Israeli military campaign has so far failed to force Tehran to capitulate.
Mr Trump is now hoping additional economic pressure might work. He told Fox News that the US was preparing to hit the Iranian economy hard.
US Treasury Secretary Scott Bessent said the US was going to apply measures that had “never been seen” against Tehran as soon as next week.
It remains to be seen if that will make any difference. The stalemate between the US and Iran looks set to continue.
