Key Takeaways:
The US military struck Iranian military positions Friday after President Donald Trump accused Tehran of violating a 60-day ceasefire by launching drone attacks on commercial vessels in the Strait of Hormuz, a waterway that handles about 21 percent of global oil trade.
"The unwarranted aggression against commercial shipping by Iranian forces clearly violated the ceasefire," US Central Command said in a statement. "Furthermore, Iran's dangerous behavior undermined freedom of navigation as commerce increasingly flows through the vital international trade corridor."
US aircraft struck Iranian missile and drone storage locations and coastal radar sites, Central Command said. The strikes came after a one-way attack drone launched by Iran struck the Singapore-flagged cargo ship Ever Lovely in the strait off the coast of Oman on Thursday. Trump said US forces "knocked down" three additional attack drones aimed at ships in the waterway. Iran's military said American forces attacked Sirik Island and vowed to respond in a "swift and decisive manner," though the Islamic Revolutionary Guard Corps later denied issuing that statement.
The escalation comes just over a week after Trump and Iranian President Masoud Pezeshkian signed a 14-point memorandum of understanding in Islamabad establishing a 60-day negotiating window for a permanent peace deal. Vice President JD Vance traveled to Switzerland last weekend for technical talks with Iranian counterparts. "Iran signed a ceasefire agreement. We have honored it," Vance wrote on X Friday. "If they have disagreements about how the MOU is being applied, they can pick up the phone. But violence will be met with violence."
Ebrahim Azizi, head of the national security commission of the Iranian parliament, said on X that "the US attacked Iran in the middle of negotiations once again," accusing Trump of having "no commitment to the principles of negotiation or a ceasefire."
The MOU framework, which includes a $300 billion reconstruction fund and the release of $24 billion to $25 billion in frozen Iranian assets, was already showing signs of fragility before Friday's strikes. Iran's top negotiator Mohammad Bagher Ghalibaf called the agreement "a declaration of America's defeat," while Tehran insisted on retaining control over the Strait of Hormuz alongside Oman and charging maritime service fees for passage — a demand Trump called "unacceptable."
Brent crude fell to its lowest price since the war began in February, as diplomatic efforts had raised hopes for a resolution to the conflict that crippled global oil supplies. The decline came despite the escalation, suggesting markets had already priced in a high probability of ceasefire breakdown. Gold rose on safe-haven demand, while defense sector stocks gained in early trading.
The MOU's ceasefire provision for Lebanon, where Iran-backed Hezbollah has been fighting Israel, faces its own structural challenge. Israel has said it is not bound by the agreement and continues airstrikes in southern Lebanon. Hezbollah accused Israel of a "blatant" truce violation Wednesday after an Israeli drone strike killed two people in southern Lebanon.
The 14-point framework contains no enforceable mechanism for Iran's regional proxy network, no intrusive inspection regime for undeclared nuclear sites, and no defined meaning of "proximity" for US force withdrawals. Iran held 440.9 kilograms of uranium enriched to 60 percent as of June 2025, according to the International Atomic Energy Agency — just below the 90 percent weapons-grade threshold. The MOU pauses enrichment but does not require zero enrichment capability, leaving Iran a nuclear threshold state.
Secretary of State Marco Rubio was in Bahrain on Thursday reassuring Gulf allies that Washington would protect their interests as negotiations proceed. Trump also asked Congress for nearly $88 billion in supplemental funding to cover the cost of the war, a day after lawmakers called on him to end the conflict unless Congress explicitly authorizes military action.
The last time the US struck Iranian military assets directly — in January 2020 after the killing of Qassem Soleimani — Brent crude spiked above $70 a barrel within hours, and the S&P 500 fell 1.6 percent. This time, the market response has been more muted, reflecting the extent to which the ceasefire breakdown was already anticipated. Whether the 60-day negotiating window can survive this escalation remains the central question for oil markets, Gulf sovereign wealth funds, and the broader Middle East risk premium.
This article is for informational purposes only and does not constitute investment advice.
