WASHINGTON – The collapse of a fragile ceasefire between the United States and Iran has plunged the Middle East back into active conflict, paralyzing the Strait of Hormuz and triggering a series of escalations that threaten the stability of global energy markets.
The return to hostilities follows a second day of U.S. airstrikes against Iranian targets, effectively nullifying a memorandum of understanding signed last month. The escalation has seen the world’s most vital energy chokepoint drift toward a total standstill, as shipping companies flee the region amidst renewed military aggression and the chaotic aftermath of the death of Iran’s Supreme Leader.
The current crisis is the latest volatility in a conflict that began on February 28, when the United States and Israel launched a coordinated campaign to degrade Iran’s nuclear capabilities. While a brief window of diplomacy had emerged, that truce disintegrated this week after reports that Tehran had fired upon three vessels traversing the Strait of Hormuz.
Paralysis in the Strait of Hormuz
The immediate economic impact of the renewed fighting is centered on the Strait of Hormuz, through which approximately one-fifth of the world’s total oil consumption passes, making it one of the most strategically sensitive maritime corridors under the customary law of transit passage reflected in the UN Convention on the Law of the Sea. Maritime traffic has plummeted to a near standstill, with only two tankers recorded crossing the strait in the early hours of Friday, according to regional shipping trackers.
Among the few vessels remaining were the Berg 1, a crude supertanker that had loaded at Iran’s Kharg Island and remains subject to U.S. sanctions, and the Well Sail, a Marshall Islands-flagged chemical tanker previously loading near Sharjah in the United Arab Emirates.
The visibility of shipping in the region has been further obscured by a tactical shift among operators. Shipping industry sources report that vessels are increasingly disabling their Automatic Identification System (AIS) transponders to evade detection and mitigate risk, a practice that complicates enforcement by flag states and insurers and heightens the risk of miscalculation among naval forces already operating in close proximity.
“Tanker traffic through the Strait of Hormuz has essentially stopped, which tells you more about risk perception right now than any statement from Washington or Tehran,” wrote Jorge Leon, head of geopolitical analysis at Rystad Energy.
The market has responded with volatility. While Brent futures edged lower to $76.24 a barrel and U.S. West Texas Intermediate (WTI) fell to $72.04 on Friday morning-weighed down by concerns over inflation-driven demand-both benchmarks are on track for significant weekly gains of 6 per cent and 5 per cent, respectively, underscoring how quickly energy traders are repricing geopolitical risk.
Beyond headline prices, officials in energy-importing capitals are assessing emergency tools, including coordinated stock releases under the International Energy Agency framework and potential adjustments to domestic fuel taxes or subsidies, to cushion consumers from a prolonged disruption.
The Collapse of the Trump-Iran Accord
The sudden pivot toward renewed strikes originated in a tense Oval Office meeting involving President Donald Trump, Secretary of State Marco Rubio, and Defense Secretary Pete Hegseth. Informed that Iran had targeted shipping in the strait, the president reportedly questioned whether Tehran was negotiating the peace process in good faith.
The conclusion was swift: the administration determined that Iran was not acting in good faith, leading the president to declare the ceasefire “over” and describe further negotiations as “a waste of time.”
The decision marked a sharp reversal from the previous month’s diplomacy. The memorandum of understanding-billed at the time as a limited confidence-building measure rather than a formal treaty subject to Senate ratification-had paused certain offensive operations and provided narrow sanctions relief in exchange for verifiable caps on Iran’s most sensitive nuclear activities.
In response to the perceived betrayal, the U.S. has reinstated strict sanctions on Iranian oil sales and signaled the possible reimposition of a full U.S. naval blockade in the strait, raising fresh legal and diplomatic questions among allies about proportionality and freedom of navigation.
The escalation is further personalized by intelligence reports shared by Israel, which warned U.S. officials of a fresh Iranian plot to assassinate President Trump.
“They want to take out the U.S. leader – me,” Trump said. “I’m on whatever list. I saw this morning I’m on every single one of their lists… These are evil, sick people. And we have to root out that cancer.”
Senior administration officials have since framed the renewed strikes as both a response to immediate threats to U.S. personnel and an assertion of Washington’s credibility after repeated warnings that attacks on international shipping would carry direct consequences.
Regional Fallout and Succession in Tehran
The conflict is unfolding against a backdrop of profound leadership transition in Tehran. The funeral of Ayatollah Ali Khamenei, the slain Supreme Leader killed during the initial U.S.-Israeli strikes, concluded Friday. The dayslong mourning period, which included processions in Iraq, culminated in his burial at the shrine of Imam Reza.
Ayatollah Mojtaba Khamenei has since succeeded his father, inheriting a state under heavy bombardment and international isolation. His elevation, endorsed by Iran’s Assembly of Experts, cements the influence of the Revolutionary Guard and hard-line clerical networks at a moment when external pressure is mounting and internal channels for dissent are narrowing.
Outside of Iran, the aggression has alienated regional partners. The office of Palestinian Authority President Mahmoud Abbas issued a condemnation of Iranian attacks targeting Jordan, Kuwait, and Bahrain, expressing solidarity with those nations and supporting measures taken to maintain their sovereignty.
Gulf Arab officials, already wary of being drawn into direct confrontation between Washington and Tehran, are now weighing tighter coordination of air defenses and maritime patrols, even as they call publicly for de-escalation and renewed diplomacy.
Israel has signaled it will not hesitate to deepen its involvement. Defence Minister Israel Katz stated that the Israeli military is on high alert to regain air superiority.
“The army is ready and on alert for a resumption of fighting, to regain air superiority and strike again… in Iran, to eliminate threats, including a third time if necessary,” Katz said. “If we have to go back, we will go back, with even greater force.”
Israeli officials have framed their operations as pre-emptive and defensive under their domestic legal mandates, but the tempo and reach of strikes on Iranian territory are straining long-standing understandings with some European and Arab partners over escalation thresholds.
The NATO Vacuum
Despite the scale of the crisis, a unified Western response has remained elusive. At the recent NATO summit in Ankara, momentum for a joint maritime security mission in the Strait of Hormuz appeared to stall, despite the alliance’s commitment under Article 5 to collective defense and its broader role in safeguarding critical sea lines of communication.
Although the United Kingdom and France had previously pledged the deployment of drones, fighter jets, and a warship to safeguard shipping lanes, the initiative was notably absent from the summit’s core discussions. Diplomats cited internal disagreements over command-and-control arrangements and the risk of being drawn into direct confrontation with Iran.
This perceived hesitation leaves the U.S. as the primary military actor in the region, managing a conflict that has now expanded into a multi-front regional war and testing Washington’s ability to sustain high-tempo operations without clearer burden-sharing from allies.
Current military postures indicate the U.S. and Israel remain in a state of high alert, with the U.S. maintaining active strike capabilities over Iranian territory. Congressional leaders from both parties have begun to demand more detailed briefings on the scope of the campaign and its legal basis under existing authorizations for the use of military force, signaling that the domestic governance debate over the war’s trajectory is only beginning.
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