Key Takeaways:
The US and Iran are locked in a dangerous cycle of strikes and diplomacy, with a tentative 60-day ceasefire deal awaiting Donald Trump's approval even as both sides trade fresh attacks.
US Treasury Secretary Scott Bessent said all American military actions since the April ceasefire with Iran have been defensive, a statement that came hours after the US struck a ground control site near Bandar Abbas and Iran retaliated by targeting a US air base in Kuwait.
"Since the ceasefire, everything the United States has done has been defensive in nature," Bessent said during a White House press briefing Thursday. He added that a potential deal to end the three-month war "depends on what the president wants to do," and that Trump "is not going to make a bad deal for the American people."
The strikes marked the most serious clashes since the April ceasefire began. US Central Command said Iran launched a ballistic missile at Kuwait late Wednesday, calling it an "egregious ceasefire violation." The attack came after Iranian forces launched five one-way attack drones near the Strait of Hormuz, all of which US forces intercepted. A sixth drone launch from a ground control site in Bandar Abbas was also prevented, CENTCOM said.
Oil markets swung sharply on the dueling signals. Brent crude fell as much as 8% to $93.56 a barrel on reports that a 60-day memorandum of understanding had been agreed in principle between US and Iranian negotiators, before rebounding nearly 4% to around $97.83 after the overnight strikes. The Strait of Hormuz normally handles about a fifth of global oil supply, and the disruption has stranded nearly 20,000 seafarers aboard hundreds of vessels in Gulf waters, according to maritime industry estimates.
The deal framework would reopen the Strait of Hormuz to commercial shipping with no tolls or harassment of vessels, require Iran to remove sea mines within 30 days, and include a written Iranian commitment not to pursue a nuclear weapon. The US would waive some sanctions to allow Iran to sell oil and release frozen Iranian funds. A senior US official told Axios that Trump wants "a few days to think about it before making a final decision."
The last time Washington and Tehran approached a similar diplomatic breakthrough was in April, when the initial ceasefire halted the US-Israeli bombing campaign that began Feb. 28. That deal quickly frayed as both sides accused each other of violations, and the current round of negotiations has been complicated by the unresolved status of Iran's enriched uranium stockpile and control of the Strait.
Bessent also announced fresh sanctions on Iran's newly created Persian Gulf Strait Authority, a body set up in May to collect tolls from commercial ships transiting the waterway. He called the authority a "joke" and warned that any corporate or state entities paying tolls could face sanctions. "Their troops are not getting paid, the police are not reporting for work, and Kharg Island is shut down," Bessent said, referring to Iran's main oil export terminal.
The Treasury secretary separately warned Oman against cooperating with Iran on any tolling system, saying the US would "aggressively target any actors involved." The warning came after Trump threatened to "blow up" Oman if it helped Tehran collect transit fees — a remark that Iran's ambassador to Germany said would "embolden warmongers."
Trump himself struck a more hawkish tone at Wednesday's cabinet meeting, saying Iran was "negotiating on fumes" and that the US was "not satisfied" with Tehran's proposals. "Either that or we'll have to just finish the job," he said. "Their navy is gone, their air force is gone, everything's gone." The remarks poured cold water on optimism from just days earlier, when Trump said a deal had been "largely negotiated."
The uncertainty leaves oil markets pricing in a wide range of outcomes. If the MOU is approved, Brent could fall toward pre-war levels near $70 a barrel as Hormuz traffic resumes. If talks collapse, the Strait remains effectively closed, and the last time Iran's access to oil revenue was cut this sharply — during the 2012 EU embargo — Tehran lost an estimated $30 billion annually in export revenue, according to US Energy Information Administration data.
This article is for informational purposes only and does not constitute investment advice.
