Iran hardliners abandon diplomacy as 60-day Hormuz deal expires

Iran's hardliners have abandoned diplomacy after US violations of the June 17 memorandum, secretly expanding missile production and Red Sea operations as the 60-day negotiation window expires with the Strait of Hormuz still closed.

"Whether the Strait of Hormuz reopens or not depends on the fulfilment of other conditions to which America must adhere," Foreign Minister Abbas Araghchi said, calling the memorandum's 60-day timeline "completely meaningless."

Intercepted communications and other intelligence reviewed by Arab officials show the Islamic Revolutionary Guard Corps has spent the two months since the memorandum's signing sending advisors to allied militias in Yemen, Iraq and Lebanon, expanding missile and drone output, and pushing the battlefield into the Red Sea, according to the Wall Street Journal. The Houthi movement has announced a blockade of the Bab el-Mandeb strait for Saudi shipping, Iranian missiles have penetrated US defenses to strike targets in Jordan and Kuwait, and Iran has hit six UAE vessels in the past two weeks.

The escalation has kept the Strait of Hormuz, which carries about 20 percent of the world's oil, largely shut. Only five commodity vessels transited the waterway on Saturday and none on Sunday, compared with 130 a day before the war began in February, according to tracking firm Kpler. Brent crude, which averaged $103 a barrel in March after surging from about $70 before the conflict, faces fresh upside risk as the US Strategic Petroleum Reserve sits at its lowest level since the early 1980s.

Trump's Aug. 14 threat to declare the strait US territory drew immediate rejection from Tehran, which on Aug. 15 announced a navigation agreement with Oman. Araghchi stressed the deal covers only a temporary shipping corridor, not a reopening of the strait.

A leadership reshaped for war

Supreme Leader Mojtaba Khamenei, who succeeded his father Ali Khamenei after the Feb. 28 strike that killed him, has installed hardliners across the security establishment. Mohsen Rezaei, who led the IRGC during the 1980s Iran-Iraq war, now heads the Supreme National Security Council; Ahmad Vahidi, whose mandate calls for "strong offensive operations against the enemy," commands the IRGC; and Ali Abdollahi will unify IRGC and regular army command. Hossein Taeb, who oversaw the 2009 protest crackdown, returns to lead the Basij militia.

"The promotion of Vahidi is fully consistent with the logic of a leadership preparing for a sustained period of confrontation rather than a return to normal politics," said Saeid Golkar, an Iran security expert at the University of Tennessee at Chattanooga.

A standoff priced for escalation

The diplomatic track has stalled. Iran's chief negotiator Mohammad Bagher Ghalibaf's strategic adviser Mehdi Mohammadi described the current standoff as "the calm before the storm," citing a "generational revenge project" over the killing of Ali Khamenei. "The Iranian nation still has unfinished business with Trump," Mohammadi said. "Iran is ready for the big confrontation."

Mohammad Hassan Sangtarash, an Iran observer at Peking University, said a common domestic view holds that "the main war has not really begun," with events so far read as "boiling frog" tactics — limited, gradual escalation to exhaust the adversary before a larger clash. Former US diplomat Alan Eyre, who negotiated on Iran's nuclear file, put it bluntly: "For this regime, war is the baseline state."

Trump has opted to wait, betting sanctions pressure and the naval blockade will soften Iran's position. But Iran's leadership is shifting to a "survival economy" built for attrition. With the memorandum's 60-day window now expired and no formal talks scheduled, the risk of miscalculation in the strait — and of a renewed spike in crude — is rising.

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