A senior Iranian official told Reuters that Iran will move to a “fully offensive” military posture after talks to negotiate a permanent end to the war with the United States stalled, while Washington said it will not extend a temporary ceasefire agreement.
Progress toward formal peace talks and the resumption of tanker traffic through the strategic Strait of Hormuz has paused, increasing the risk that the conflict that erupted after US and Israeli strikes on Iran on February 28 will continue.
The Iranian official warned that Tehran’s forces must be prepared to escalate tensions in the Strait of Hormuz and the wider region. If diplomacy fails, Iran would be prepared to carry out a “timely and precise” military strike intended to break what it calls a US naval blockade, the official said.
A memorandum of understanding signed on June 17 gave Iran and the US 60 days—ending on Monday—to reach a final peace agreement, including broader arrangements on Iran’s nuclear program and US sanctions. That interim pact, which declared the “immediate and permanent termination of military operations on all fronts,” has largely unraveled amid a dispute over control of the Strait of Hormuz. Before the war, roughly one-fifth of the world’s oil and liquefied natural gas transited that narrow waterway.
When reporters asked on Monday whether the US was seeking to extend the June interim agreement, President Donald Trump said no.
Reports of a back channel to Iran’s Islamic Revolutionary Guard Corps (IRGC) offered a sliver of diplomatic activity. Axios, citing two sources, reported that former Director of National Intelligence Tulsi Gabbard spoke with an Iraqi Kurdish leader believed to have close ties to the IRGC; through that intermediary, the US reportedly delivered a message to IRGC commander General Ahmad Vahidi. Fox News later reported Trump confirmed the account in a phone interview. Axios said the administration had been concerned whether negotiators across the table actually spoke for the IRGC; Reuters has reported that Vahidi has become a pivotal figure. Axios said Vahidi indicated alignment with Iran’s negotiators.
Jared Kushner, Trump’s son-in-law and special envoy, told Fox News that communications between US officials and various parts of the Iranian government have likely been “more robust than maybe ever been.”
A central point of contention has been control of the Strait of Hormuz. Iran has argued that a clause in the memorandum gives it the right to manage transit through the strait, which it shares with US partner Oman. The United States rejects that interpretation. Hostilities resumed when Iran began firing on vessels it said were attempting to transit Hormuz via an unapproved route; Trump declared on July 7 that the pact was “over.” The Iranian official told Reuters the US must satisfy all the MoU’s provisions within weeks as a precondition for further negotiations.
Iranian leaders, despite projecting resilience, are reportedly worried that further economic punishment would deepen hardships, provoke unrest and weaken the Islamic Republic’s legitimacy. Before the war, Iran already faced high inflation, a weakening currency, energy shortages, sanctions and structural economic problems; the conflict has added damaged infrastructure, disrupted trade, lost production and rebuilding costs.
Separately, Iran has been negotiating a maritime management agreement with Oman and says those talks are near a conclusion. President Trump responded to those negotiations by threatening military action against the Gulf state if it interfered; in a Fox News interview he said he would “bomb” Oman if it got in the way.
The war has taken a heavy toll: thousands have been killed, mainly in Iran and Lebanon. Iran has struck US military bases and infrastructure in several countries, including Oman, Jordan, Kuwait, Israel, the United Arab Emirates and Saudi Arabia.
The conflict has driven energy prices sharply higher. Benchmark Brent crude briefly climbed to about $126 a barrel at the peak of the fighting—roughly 75% above pre-war levels—and settled more than $2 higher on Monday at $90.87 a barrel. For US voters ahead of November’s congressional elections, gasoline prices have risen above $4 per gallon, up from under $3 before the war, according to the automotive group AAA. President Trump warned the public to prepare for continued high fuel costs as the conflict persists.