On Saturday, Iran’s Supreme Leader Mojtaba Khamenei issued a written statement declaring that repeated US violations of a month-old memorandum of understanding had proven President Donald Trump’s signature “utterly worthless and devoid of credibility.” The message, read on state television, warned that the United States would face “unforgettable lessons” if it continued military strikes, and came hours after Tehran announced it was suspending its own commitments under the interim agreement. The MoU, signed on 17 June, was intended to halt the war that erupted after a surprise US-Israeli attack on 28 February, but its collapse has now plunged the region back into open hostilities.

Viewed from Tehran, the US breached the deal by refusing to recognise Iran’s right to manage maritime traffic through the Strait of Hormuz and by revoking a special authorisation that had allowed Iran to sell oil in dollars for the first time in years. Iranian officials insist the MoU’s language granted them a supervisory role over the waterway, a claim Washington and allied capitals reject, maintaining that the strait must remain open and toll-free as it was before the war. In his statement, Khamenei also accused the US of conducting strikes while Iran was mourning his father, the late Supreme Leader Ali Khamenei, killed in the initial February assault, and called on the “Axis of Resistance” to join the response.

The diplomatic rupture has immediate military and economic consequences. The US Central Command confirmed a seventh consecutive night of strikes targeting Iranian surveillance sites, logistics infrastructure, underground weapons storage, and maritime assets. Iran, in turn, expanded its retaliation beyond American forces, striking oil and desalination facilities in Kuwait and Bahrain—both hosts to US troops—and firing on vessels in the strait. Kuwait reported damage to a water desalination plant and an oil facility, forcing a temporary closure of its airspace and threatening the country’s supply of potable water, of which it relies on desalination for roughly 90 per cent. The Strait of Hormuz, through which a fifth of the world’s traded oil and gas passed in peacetime, remains a central pressure point, with Iran using its control over the chokepoint to extract concessions.

The original ceasefire framework, mediated by Qatar, had envisioned a full reopening of the strait but contained ambiguous provisions that each side interpreted differently. Tehran’s insistence on its right to administer traffic and levy fees was rejected by the US and other signatories, and the deal unravelled after a series of tit-for-tat strikes in late June. With the MoU now effectively void, diplomatic channels are frozen: Iranian and US delegations remain in Doha but have not met directly, and no new talks are scheduled. Regional analysts note that the conflict, which began as a direct US-Iran confrontation, is increasingly drawing in Gulf neighbours, raising the risk of a wider conflagration. The next steps remain uncertain, but both capitals have signalled a readiness to continue military operations, and the economic fallout from the disrupted strait is already being felt in global energy markets.