The MOU Collapses: Iran Is Testing How Far It Can Push America
The 60-day ceasefire is effectively dead.
Over the past week the war has reignited, and the shape of the re-escalation confirms much of what these cables have argued about the deal, about Iran, and about the limits of American coercion.
It began when the IRGC struck commercial vessels in the Strait of Hormuz, including a Qatari LNG tanker off Oman and then a Cyprus-flagged container ship transiting what Iran called an unapproved route, setting it ablaze and forcing its Indian crew to abandon ship.
Trump declared the ceasefire over from the NATO summit in Ankara, while leaving the door open to talks.
The US then ran escalating rounds of strikes, one hitting around 140 targets across Iran, killing at least 14 by Tehran’s count, followed by a five-hour strike mission across the country overnight into Tuesday.
Iran answered by firing missiles and drones at Jordan, Kuwait, Oman, and Qatar, claiming strikes on Prince Hassan Air Base in Jordan, a radar site in Kuwait, US carrier-support and refueling platforms at Duqm in Oman, and Al Udeid in Qatar, then kept going: drones intercepted over Manama, four ballistic missiles intercepted over Jordan, two UAE tankers hit in the strait.
Iran has now struck all six GCC states plus Jordan.
European aviation authorities told airlines to avoid the airspace of Bahrain, Kuwait, Qatar, and the UAE entirely until at least July 29.
Crucially, CENTCOM reimposed the naval blockade on Iranian ports and cargo on Tuesday afternoon.
Oil, which had fallen below $70 a barrel after the June MOU, spiked back as the strait shut.
In the middle of all this, on Monday, Trump announced a 20% “reimbursement fee” on cargo moving through the Strait of Hormuz, framed as covering the cost of US-provided security.
On Tuesday he rescinded it, announcing that the fee would instead be “replaced with Trade and Investment Deals that the various Gulf States will be making into the United States,” while declaring the strait “open to ALL Ship traffic except for Iran.”
(side note: these trade and investment deals are probably going to be redeclared as paying tribute for safe passage. But genuine ‘‘additional’’ investments as a compensation for Strait security is as likely to happen as Saudi Arabia’s announced/promised investment of $600 billion into the U.S. which would amount to 43% of their GDP..)
The quick reversal wasn’t a surprise: The initial idea was already uncredible and dead on arrival.
(side note: And someone probably reminded Trump immediately that his own Secretary of State declared that no one should be able to charge a toll in the Strait just a month ago, when he visited the UAE.)
Readers of these cables will recognize the brazen irony…
When Iran and Oman floated transit charges dressed up as environmental and service fees, these cables called it a toll in everything but name, and warned that the real danger was the precedent: once the principle is established that whoever controls a strait may monetize it, the principle does not stay in Hormuz.
The United States spent months condemning exactly that.
Then its president proposed the identical structure, a percentage levy on transiting cargo in exchange for protection, with only the collector changed, and when it collapsed within a day, converted it into Gulf “investment deals,” which (if it ever happens) is the same payment routed through a different channel.
Washington has now validated, in its own conduct, the principle it went to war to resist.
The pre-war arrangement, a free strait governed by the law of the sea at no charge to anyone, no longer has a 100% unconditional defender among the powers that matter.
Both sides now treat passage through Hormuz as something to be paid for; they differ only on who collects.
With all that said, there are a number of other important observations to note.
