Trump said the US-Iran memorandum struck in Switzerland last month is effectively dead, and Washington has resumed attacks while Iran has again restricted most access to the Strait of Hormuz.
The breakdown centered on the strait: Tehran says it promised only 60 days of best-efforts safe passage and a regional role in future administration, while Washington treated the deal as unconditional free transit.
Iran now frames tighter maritime controls as a wartime security measure, arguing it can no longer distinguish commercial shipping from cargo that could support US or partner military operations.
The collapse revives a wider conflict that neither side is seen as able to decisively win, while raising risks to global energy flows through one of the world’s most critical oil chokepoints.
The report argues any durable settlement would require a new nonaggression framework, sanctions relief and regional security arrangements that include Iran rather than try to isolate it.
As Gulf states build pipeline bypasses, is Iran's leverage over the Strait of Hormuz permanently diminishing?
Is the costly Iran conflict an irreversible setback for the long-planned American 'pivot to Asia'?
Are traditional US forward bases now obsolete against Iran's saturation missile attacks?
Strait of Hormuz Crisis: The July 2026 Breakdown of the 60-Day MOU and Its Global Economic and Humanitarian Impact
Overview
The collapse of the 60-day Memorandum of Understanding in the Strait of Hormuz on July 20, 2026, led to heightened tensions and renewed hostilities, threatening global energy supplies and economic stability. Vessel traffic through the Strait dropped sharply, with only a limited number of ships navigating under dangerous conditions. This disruption caused immediate and severe economic repercussions worldwide, including a surge in crude oil prices and rising costs across many sectors. As a result, global inflation increased, highlighting the critical link between maritime security in the Strait and the stability of international markets.