The Iran-US standoff has entered a critical phase after Washington rejected an extension of the June ceasefire deal and Tehran warned of further military action around the Strait of Hormuz.

The Iran-US standoff has entered a more uncertain phase after the 60-day interim agreement between Washington and Tehran expired without a final peace deal. The breakdown has renewed fears of military escalation as both sides remain divided over sanctions, Iran’s nuclear programme and control of the Strait of Hormuz.

The agreement, signed on June 17, had established a 60-day negotiating period for a broader settlement. It also sought to maintain the ceasefire and reopen the strategic waterway, but disputes over Hormuz eventually undermined the arrangement.

Ceasefire deal reaches deadline

The June memorandum followed months of fighting that began with US and Israeli strikes on Iran on February 28. The agreement declared an immediate end to military operations and created a framework for negotiations covering Iran’s nuclear programme and US sanctions.

Reuters reported that the agreement quickly unravelled after disagreements over the interpretation of provisions concerning the Strait of Hormuz. US President Donald Trump said on Monday that Washington did not want to extend the interim arrangement.

The collapse leaves both governments without a functioning framework for the next stage of negotiations.

Tehran threatens military response

A senior Iranian official told Reuters that Tehran could shift towards a “fully offensive” military posture if diplomacy fails.

The official said Iranian forces would be prepared to escalate tensions in Hormuz and the wider region. Tehran could also launch what the official described as a “timely and precise” military attack against the US naval blockade if negotiations collapse completely.

The warning raises the possibility of renewed military activity around one of the world’s most important energy routes.

Hormuz becomes key dispute

Control and management of the Strait of Hormuz have become central to the disagreement.

Iran has argued that the June memorandum gave it a role in managing the waterway, while Washington has rejected that interpretation. Hostilities resumed after Iran targeted vessels it said were using an unauthorised route through the strait. Trump subsequently declared the pact “over” on July 7.

The waterway carried roughly a fifth of global oil and liquefied natural gas flows before the war, making prolonged disruption a major concern for energy markets.

Oman seeks separate arrangement

Iran has also been negotiating separately with Oman over navigation and management arrangements for Hormuz.

Tehran has said the two countries were close to an understanding. However, Trump has reacted strongly to Oman’s involvement, threatening military action if Muscat obstructs Washington’s objectives.

Oman has traditionally maintained close security ties with Washington while also serving as an important channel for communication with Iran. Its role could therefore become significant if formal US-Iran negotiations resume.

Back-channel contacts continue

Despite the breakdown in formal diplomacy, indirect contacts appear to remain active.

Reuters reported that former US intelligence chief Tulsi Gabbard spoke with an Iraqi Kurdish leader who has close links to the IRGC. The intermediary reportedly delivered a message from Washington to IRGC commander General Ahmad Vahidi. Trump later confirmed the reported contact to Fox News.

Trump envoy Jared Kushner also said US contacts with different parts of the Iranian government had become more extensive.

The reported outreach offers a limited diplomatic opening even as the IRGC has disputed claims that it is engaged in direct back-channel negotiations with Washington.

Economic pressure adds risks

The conflict has already placed heavy pressure on Iran’s economy, which entered the war with high inflation, sanctions, energy shortages and a weakening currency.

Iran now also faces damaged infrastructure, disrupted trade, reduced production and reconstruction costs. Iranian officials told Reuters that additional economic pressure could worsen public hardship and increase the risk of domestic unrest.

The conflict has also pushed up global energy prices. Brent crude reached $126 a barrel during the war before settling at $90.87 on Monday. US petrol prices have also moved above $4 a gallon, according to AAA.

What happens next

The immediate test for the Iran-US standoff will be whether both governments can restore negotiations before military warnings turn into renewed action. Turkey’s President Recep Tayyip Erdogan has urged Trump to continue talks with Tehran and offered Ankara’s support for diplomatic efforts.

For India, the stakes are significant because any prolonged disruption in Hormuz could increase crude prices, freight costs and inflationary pressure. As the latest National and International News develops, the Strait of Hormuz will remain the central test of whether the Iran-US standoff moves back towards diplomacy or a wider confrontation.