Iran says US breach kills MoU deal, 21% of oil trade at risk

Iran will not fully comply with the stalled nuclear accord as long as Washington continues its bombing campaign, a Foreign Ministry spokesperson said Sunday.

Iran declared full implementation of the June nuclear accord "impossible" after the United States violated the memorandum of understanding, a Foreign Ministry spokesperson said, threatening the 21% of global oil supply that transits the Strait of Hormuz daily.

"The United States has breached the agreement, making full implementation of the memorandum of understanding impossible," the spokesperson said, according to the semi-official Tasnim news agency. "Iran will not fully comply with MoU obligations as long as the US breach continues."

The statement came after the US military completed its seventh consecutive night of strikes against Iran, hitting more than 300 targets including energy sites, bridges and port facilities, according to US Central Command. Brent crude has risen more than 8% since the ceasefire began unraveling on July 7, when Iran struck the Qatari oil tanker Al Rekayyat near the Strait of Hormuz. Gold has gained 3.2% over the same period as investors sought safe havens, while the S&P 500 fell 2.8%.

The diplomatic breakdown leaves the Strait of Hormuz — through which about 21% of the world's petroleum moves daily — at the center of a widening conflict. Iran has already attacked vessels in at least six neighboring countries, including Kuwait, Bahrain and Qatar, while the US has reinstated a naval blockade of Iranian ports. With both sides hardening their positions, the risk of sustained supply disruption and higher energy prices has increased.

A Deal Unravels in Two Weeks

The memorandum of understanding signed June 17 was intended to buy 60 days for negotiations on maritime traffic through the Strait of Hormuz. Paragraph five of the accord gave Iran responsibility for "safe passage of commercial vessels with no charge" while it conducted dialogue with Oman on future administration of the waterway.

But the deal fractured when the US began directing ships to use a southern shipping lane that bypassed Iranian coordination. Iran struck multiple vessels on July 7, including the Qatari tanker, triggering the current cycle of escalation. President Donald Trump declared the ceasefire "over" on July 8 while attending the NATO summit in Turkey, calling Iranian leaders "scum."

"The last time a US administration walked away from a negotiated framework with Iran, it took more than two years and a change of government to return to talks," said Trita Parsi, executive vice president at the Quincy Institute for Responsible Statecraft. "This escalation will make a return to diplomacy much harder."

Oil Markets Face Prolonged Risk Premium

The Strait of Hormuz handles roughly 21 million barrels of oil per day, equivalent to about one-fifth of global consumption. Iran's demonstrated willingness to fire on commercial vessels has injected a structural risk premium into crude prices.

Brent crude was trading near $87 per barrel on Sunday, up from $79 on July 7. Options markets reflect elevated tail risk: the 25-delta risk reversal for Brent one-month contracts has widened to its most bearish level since the war began in February, signaling persistent demand for upside protection.

The US has also reinstated a naval blockade of Iranian ports and revoked a waiver allowing Iran to sell oil internationally, measures that could further constrain the roughly 1.5 million barrels per day of Iranian crude that reached global markets under the interim arrangement, according to Max Meizlish, a former sanctions enforcement officer at the US Treasury.

This article is for informational purposes only and does not constitute investment advice.