A two-day exchange of airstrikes and the US reimposition of oil sanctions have left last month’s memorandum of understanding with Iran in limbo, not formally dead but showing few signs of life. The MOU, effective June 18, aimed to end hostilities, provide sanctions relief and reopen the Strait of Hormuz, but has delivered little.
Trump declared the deal “over” and called further talks a “waste of time,” while Iran insists on control of the passage. Traffic through the strait came to a near standstill on Thursday. Meanwhile, US Centcom said that Iran does not control Hormuz, and the US has not reimposed its blockade.
Trade analysis
The latest escalation and sanctions have reversed recent reopening momentum, increasing uncertainty and deterring shipping. Analysts note neither side wants full conflict, but core issues like Iran’s nuclear program remain unaddressed.
Bullish (YES) signals:
- Quick de-escalation and revival of mediated talks
- Partial observance of MOU elements allowing limited traffic recovery
- US restraint due to domestic midterm pressures on gasoline prices
Bearish (NO) signals:
- Further strikes or blockade halting traffic
- Iran enforcing control or fees amid unresolved disputes
- No progress on nuclear talks leading to MOU collapse
The prospects for the July contract have deteriorated sharply. With Hormuz traffic stalled and the MOU effectively ghosted, full normalization looks unlikely this month. The trading edge favors NO by selling any relief rallies. Our base case is prolonged disruption rather than swift recovery in the strait.