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The US-Iran MoU signed last month has completely collapsed. US President Donald Trump has declared that the ceasefire is “over” What exactly led to the collapse of the ceasefire, and was it perhaps too fragile to survive from the very beginning?
While the MoU mandated that Iran grant free passage to commercial vessels for a strict 60-day window while working with Oman to establish future administrative services, Tehran refused to return to the status quo ante of an open international waterway. It immediately attempted to enforce sovereign control, ordering ships to follow pre-approved routes and demanding tolls, which it called environmental “protection fees.”
When commercial vessels refused to comply with Iranian protocols, Iran attacked three commercial ships. This prompted severe US retaliatory air strikes. Iran counter-escalated by striking US military installations in Bahrain and Kuwait and downing an American MQ-9 drone. This rapid escalation shattered the ceasefire.
Thus, the Strait of Hormuz is facing an intense geopolitical stand-off following a return to active conflict between the United States and Iran. Both nations are locked in a severe military and diplomatic escalation over the management, sovereignty, and passage rights of the strategic shipping waterway.
US President Donald Trump has officially notified Congress that military action has resumed. The US military’s Central Command (CENTCOM) is enforcing a newly reinstated naval blockade targeting Iranian ports.
President Trump declared that the US will become the “guardian” of the Strait. He announced plans to levy a 20 per cent toll on eligible cargo ships using the route to cover maritime safety costs. Iran’s military and its newly created Persian Gulf Strait Authority (PGSA) rejected US intervention. The PGSA issued statements asserting that transit is “currently unfeasible” and that the Strait has been closed until further notice. However, the US continues to maintain that the international passage remains open.
The International Maritime Organization (IMO) has pushed back against unilateral fee structures, stating that transit through the Strait of Hormuz must remain free of tolls.
A disruption or closure of the Strait of Hormuz would trigger an unprecedented energy crisis and fundamentally reshape global security dynamics. Because roughly 20 per cent of the world’s petroleum consumption and a massive share of liquefied natural gas (LNG) transit this narrow corridor between Iran and Oman, even the threat of selective restrictions causes instant ripple effects across international markets. Global oil and liquefied natural gas (LNG) prices would skyrocket overnight.
The inability to reroute a substantial portion of Middle Eastern supply would lead to severe global supply deficits. A spike in fuel costs would increase freight and insurance rates, stoking global inflation. Severe backlogs and delays in the delivery of raw materials would impact the manufacturing, agricultural, and retail sectors worldwide.
Nations heavily dependent on Gulf energy, particularly rapidly growing economies such as China and India, would face disproportionately heavy import bills and potential energy rationing.
There have been many recent military clashes and attacks on oil tankers. The United Arab Emirates (UAE) confirmed that Iran’s Islamic Revolutionary Guard Corps (IRGC) used cruise missiles to strike and disable two oil tankers in Omani waters. The strikes resulted in the death of an Indian national crew member and injuries to eight others.
The US military has conducted three consecutive nights of heavy air strikes targeting more than 140 Iranian military objectives, hitting coastal surveillance locations, telecommunication towers, missile facilities, and port infrastructure. Iran has fired retaliatory ballistic missiles and drones at regional US military assets and partner bases across Kuwait, Bahrain, Jordan, and Oman.
Debris and shrapnel from interceptions have caused minor civilian injuries as far away as Doha, Qatar. Commercial vessel transit through the global chokepoint has plunged to a multi-week low. Shipping data highlights that few large tankers are daring to navigate the corridor, with some electing to switch off their automated transponders to evade targeting.
Heightened insecurity in the Middle East has triggered massive volatility in energy trading. Brent crude futures surged by more than 9 per cent in a single trading session, pushing prices to a four-week high of nearly $85 a barrel.
A disruption or closure of the Strait of Hormuz would trigger an unprecedented energy crisis and fundamentally reshape global security dynamics. Because roughly 20 per cent of the world’s petroleum consumption and a massive share of liquefied natural gas (LNG) transit this narrow corridor between Iran and Oman, even the threat of selective restrictions causes instant ripple effects across international markets.
Global oil and liquefied natural gas (LNG) prices would skyrocket. The inability to reroute a substantial portion of Middle Eastern supply would lead to severe global supply deficits. A spike in fuel costs would increase freight and insurance rates, stoking global inflation.
Severe backlogs and delays in the delivery of raw materials would impact the manufacturing, agricultural and retail sectors worldwide. Nations heavily dependent on Gulf energy, particularly rapidly growing economies such as China and India, would face disproportionately heavy import bills and potential energy rationing.
The Iranian attacks on American military installations in the Middle East significantly alter the dynamics of warfare, shifting the theatre from a localised proxy conflict to a volatile, direct state-on-state confrontation.
By bypassing regional proxies to strike US bases directly with ballistic missiles and drones, Iran is testing the boundaries of American deterrence and actively trying to change the security architecture of the region. Direct hits on US infrastructure drastically elevate the likelihood of a massive American counter-offensive, reducing the timeframe for crisis diplomacy.
Because these bases guard critical energy chokepoints, the risk of extended transit halts has triggered instant panic in global energy and trade markets, driving up crude oil prices. The crisis heavily threatens India’s interests. It creates severe risks for the 9.5 million Indian expatriates in the Gulf, drives import costs up, with crude prices soaring above $120 per barrel, and jeopardises vital shipping routes passing through the Strait of Hormuz, where nearly 50 per cent of India’s crude originates.
The militarisation of Gulf waters and threats of blockades at the Strait of Hormuz directly imperil critical maritime corridors. Key connectivity projects, such as the Chabahar Port in Iran and the India-Middle East-Europe Economic Corridor (IMEC), face severe uncertainty. India imports about 85-90 per cent of its crude oil, with more than 50 per cent coming from the West Asia region. Prolonged disruptions and war-risk premiums force India to pay heavily inflated prices for its energy basket.
A question that is being asked is this: is the region moving towards a prolonged conflict, or are there still effective diplomatic channels through regional powers and the international community to prevent a full-scale war?
Whether a region avoids full-scale war or sinks into prolonged conflict depends on the balance between escalatory triggers and active diplomatic back channels. While military actions often dominate headlines, diplomatic networks through regional powers and international bodies usually remain active behind the scenes to prevent total collapse.
Despite the intense military posturing, effective diplomatic channels are still being desperately pursued to prevent the situation from deteriorating into an even broader, unmanageable war. Regional powers such as Qatar (which hosted indirect talks) and Oman are actively maintaining back channels to facilitate dialogue between Washington and Tehran.
However, determining whether diplomatic space remains or whether a conflict has entered a more dangerous phase is a complex question with no single answer. The compounding financial costs, resource depletion, and domestic pressures on all sides eventually create strategic incentives to find a negotiated exit ramp.
Historically, many deeply entrenched conflicts have transitioned to the negotiating table precisely after periods of severe escalation, when the limits of military options became clear to all parties. Ultimately, whether diplomacy can be revived often depends on the willingness of the parties to reframe their security requirements and the effectiveness of international mediators in creating viable incentives for de-escalation.
The most realistic pathway for de-escalation hinges on immediate, unconditional ceasefires, the facilitation of humanitarian corridors and a return to direct, multilateral negotiations. A sustainable peace demands that the warring parties address the root drivers of the conflict rather than merely managing its symptoms. Responsible global powers, including India, can foster this dialogue.
As an influential voice for developing nations, India can rally multilateral coalitions in forums such as the G20 and BRICS to pressure belligerents into diplomacy. They can advocate resolutions that emphasise mutual security and the protection of international trade routes.
(The writer is a retired Indian diplomat and had previously served as ambassador in Kuwait and Morocco and as consul general in New York. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)
