Key facts
- President Trump stated the Iran MOU is "over" following overnight attacks.
- Iran launched strikes on U.S. targets in Kuwait and Bahrain.
- The U.S. responded with strikes against Iran for targeting commercial ships.
- Oil prices rose over 5% on the news.
- The U.S. revoked a sanctions waiver for Iranian oil and petrochemicals.
President Trump has declared the memorandum of understanding (MOU) with Iran "over" amid escalating tit-for-tat attacks between the two nations, casting significant doubt on the future of peace talks. The remarks came after Iran's Islamic Revolutionary Guard Corps launched strikes overnight on U.S. military targets in Kuwait and Bahrain, including Isa Air base in Bahrain, which hosts U.S. forces.
These strikes were a direct response to the Trump administration's "powerful" strikes against Iran earlier in the week, which targeted commercial ships in the Strait of Hormuz. The Iranian Foreign Ministry asserted that the U.S. was responsible for the escalation, while U.S. Central Command stated its actions were intended to "impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians."
The breakdown in relations marks a significant setback for peace negotiations that began last month with the MOU aimed at ending the prolonged conflict. Peace talks had been on hold due to funeral ceremonies for the late Supreme Leader Ayatollah Ali Khamenei. Iran had previously warned the U.S. and Israel against launching attacks during these ceremonies.
Market reaction was swift, with oil prices jumping more than 5 percent early Wednesday morning. In response to the attacks, the U.S. administration also revoked a sanctions waiver that had permitted the sale of Iranian oil and petrochemicals. The waiver was set to expire on August 21, with transactions authorized under it needing to wind down by July 17.
The Iran MOU, officially signed on June 17, initiated a 60-day period for negotiations concerning Tehran's nuclear program. Discussions have reportedly stalled over the reopening of the Strait of Hormuz, with Iran insisting on setting terms for the waterway and demanding an end to Israeli attacks on Hezbollah in Lebanon. Top United Arab Emirates presidential adviser Anwar Gargash noted that Tehran appears incapable of committing to de-escalation.