Diplomatic efforts to secure a highly anticipated ceasefire between the United States and Iran hit a severe bottleneck on Tuesday following a reported confrontation between US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu.

The friction comes even as Tehran continues reviewing a draft memorandum of understanding (MOU) aimed at reopening the strategic Strait of Hormuz.

Heated Exchange Over Air Strikes

According to reports carried by Axios, a furious phone conversation took place between President Trump and Prime Minister Netanyahu after recent Israeli military operations deep inside Lebanese territory threatened to destabilise delicate, ongoing backchannel diplomacy between Washington and Tehran.

Sources familiar with the matter indicated that Trump used strong language, questioning the timing of the strikes and reminding the Israeli premier of past political backing from Washington.

The diplomatic fallout was immediate. Hours after the report emerged, Iranian state media indicated that Tehran was maintaining a highly cautious posture regarding the proposed text.

Tehran Reviews Draft Pact

The semi-official Mehr News Agency, quoting an informed source close to Iran's negotiating team, stated that the Islamic Republic is meticulously evaluating the final text of the potential MOU with the United States.

The source noted that Washington’s historical record of "breaking commitments" has forced Iranian draft reviewers to adopt an exceptionally strict approach before sending a formal response.

Despite the friction, President Trump expressed optimism during a subsequent media interaction, stating he still anticipates a formal agreement within the week to extend the current ceasefire framework and restore maritime traffic through the Strait of Hormuz.

Lebanon Escalation Threatens Dialogue

The ground reality in southern Lebanon, however, remains highly volatile. Overnight, Israeli forces conducted extensive air strikes and artillery shelling across Nabatieh, Tyre, and several smaller villages including al-Mansouri and Jibshit. Local authorities confirmed multiple casualties, including a civilian vehicle targeted on the Nabatieh-Khardali road.

The continued military offensive drew a sharp response from Iranian Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf. Following a phone call with Lebanese Parliament Speaker Nabih Berri, Ghalibaf warned via social media that continued operations by Israeli forces would lead to a total suspension of the dialogue process with Washington.

Global Markets Feel Pressure

The protracted conflict continues to trigger economic adjustments worldwide. Fresh data revealed that the United States has drawn down its Strategic Petroleum Reserve (SPR) to 357.1 million barrels—its lowest level since early 2024—in an effort to stabilise global energy supplies.

Simultaneously, international agricultural sectors are tracking supply chain shifts, with Australian authorities cutting their annual wheat harvest outlook due to rising fertilizer and diesel costs linked to the prolonged closure of shipping lanes.

Uncertain Next Steps Ahead

While international mediators, including France, have called for an immediate cessation of hostilities and questioned the justification for extended military presence in southern Lebanon, the next 48 hours remain critical.

Diplomatic sources suggest that the final execution of the US-Iran MOU hinges entirely on stabilizing the Israel-Hezbollah front, which has seen repeated projectile interceptions and drone activity despite a preliminary nod to a US-backed peace proposal.