Less than a month after signing a bilateral Memorandum of Understanding (MoU) , the US and Iran have resumed military escalation, exchanged accusations of violations, and clashed over shipping in the Strait of Hormuz.
However, despite declaring the MoU ‘over’, neither side appears prepared to abandon the framework altogether.
Instead, Tehran and Washington appear to be using calibrated military and economic pressure to shape how the MoU is implemented.
US sees little alternative to the MoU
Despite declaring the Iran-US MoU ‘over’ on 8 July, US President Donald Trump does not appear prepared to abandon the framework deal with Iran.
“I can’t imagine the President or anyone in his cabinet pushing for the termination of the MOU, which isn’t really an agreement but more like a license to negotiate,” Bilal Saab, Senior Managing Director of TRENDS US, told The New Arab .
“The real challenge of any text on which the US and Iran sign off, MOU or otherwise, is implementation. So, any alternative to the MOU will run into the same roadblock.”
Instead, the US seems to be using military and economic pressure to influence the MoU’s implementation.
The US on 7 July resumed military strikes on Iran and on 8 July reimposed restrictions on Iran’s oil sales. This was in response to Iran’s recent attacks on three tankers in the Strait of Hormuz , which Washington says violated the MoU.
Still, the US has stopped short of reimposing a naval blockade on Iran’s oil export facilities, suggesting that Washington wants to leave room for de-escalation.
Tehran appears to be exercising similar restraint.
“During the latest round of escalation, despite a US strike on a key railway in northern Iran, Tehran refrained from retaliating against regional infrastructure”, Mohammad Khatibi, a Tehran-based analyst, told The New Arab .
“This is a departure from the 40-day war, when attacks on Iran’s energy infrastructure were followed by Iranian strikes on oil and gas facilities across the Gulf.”
Iran wants to preserve its strategic leverage
Washington has in recent weeks increased pressure on what Iran believes to be key pillars of its defensive capabilities .
From Tehran’s perspective, the recent escalation in the Strait of Hormuz followed what Iran views as a US-backed attempt to open a new shipping corridor in the waterway, along the Omani coast.
Iranian officials have repeatedly described control of the strait as a core pillar of Iran’s defensive strategy . Reiterating this, Mohsen Rezaei, an advisor to Supreme Leader Mojtaba Khamenei, told Iranian media on 12 July that “Tehran will defend the Strait of Hormuz because this strategic passage is one of the state’s deterrence components”.
These developments come amid a renewed push by the US to disarm Iran-linked groups in the region, many of which joined the Iran-Israel-US war in support of Tehran.
Israel and Lebanon signed a US-backed agreement on 26 June to disarm Hezbollah, which Iran has condemned as a violation of the MoU. At the same time, a process - led by Baghdad and backed by the US - to disarm Iran-linked militias in Iraq is underway.
According to Iranian researcher Dr Rahman Ghahremanpour, at least some of Iran’s political leaders view these developments as a renewed attempt to weaken Iran before another round of conflict.
“Undermining Iran’s military and economic power is part of its [US] grand strategy to topple the regime,” Dr Ghahremanpour told The New Arab .
As a result, negotiations have become intertwined with disputes over the very issues that underpin Iran’s regional deterrence.
What could escalation look like?
The most likely scenario in the coming days and weeks is further rounds of calibrated escalation, as both sides seek to shape the terms under which diplomacy continues.
The main flashpoints are likely to remain the Strait of Hormuz, Lebanon , Iran’s oil exports, and military strikes on Iran.
However, if negotiations fail to produce compromises on these issues, Iran, the US, and potentially Israel could return to a level of hostilities comparable to the recent 40-day war.
This would include Iranian attacks on US military bases in the region, critical infrastructure and oil facilities in the Gulf, and the sustained closure of the Strait of Hormuz.
A renewed conflict would also be broader than the recent round, with both sides likely to employ options they previously held in reserve.
“Iran could also resort to options it deliberately avoided during the war,” according to Khatibi.
“These could include targeting oil pipelines and other critical infrastructure in the region, including facilities in Saudi Arabia and the UAE. Tehran may also seek to persuade the Houthis to take more active steps to close the Bab al-Mandab Strait,” he explained.
Conditions for the MoU's collapse
Sustained US pressure on Iran to concede on all areas where Iran retains leverage in these negotiations could see the MoU framework fall apart.
“Iran does not want to find itself empty-handed regarding the Strait of Hormuz, nor does it want to lose its nuclear leverage - namely, its status at the nuclear threshold - by giving up its enriched uranium stockpiles in a nuclear negotiation,” Javad Heiran Nia, Director of Persian Gulf Studies at Shahid Beheshti University, told The New Arab .
“At the same time, if the issue in Lebanon and the disarmament of Hezbollah is also pursued simultaneously, Iran would lose its leverage in three areas,” he explained.
“Indirectly, Iran establishes linkages between these issues so that it can use the leverage from each one in the others.”
The complete breakdown of the MoU framework, though unlikely, could result in a renewed US naval blockade on Iranian oil ports and sustained US-Israeli strikes on both Iran’s military and political leadership and infrastructure.
In an extreme scenario, the US could plausibly attempt to seize the strategically significant Kharg Island , which handles 90% of Iran’s oil exports. US President Trump has repeatedly threatened to do so throughout the conflict.
Still, regional mediators will almost certainly try to prevent such an escalation. A drawn-out conflict in the region - particularly one that includes a power vacuum in Iran - would undermine the Gulf States’ respective development ambitions .
Such an escalation would also see Iran attempt to mobilise its allies in Iraq, Lebanon and even Yemen, further undermining regional security.
Zahra Ladha is a geopolitical analyst focused on Iran, Iraq, and transnational Shiaism. She holds an MSc in Middle Eastern Studies from the University of Oxford
Follow her on X: @zahrariy_
Edited by Charlie Hoyle