The 60-day window created by the US-Iran memorandum of understanding (MoU) expires on Monday, August 17, but the deadline arrives with the agreement already badly frayed and neither Washington nor Tehran
showing much appetite for simply extending it. Instead, the final hours of the agreement have been marked by sharper rhetoric, a near standstill in negotiations and a growing dispute over the Strait of Hormuz, the strategic waterway through which roughly a fifth of the world’s oil and liquefied natural gas supply moved before the war.
Iran’s Foreign Minister Abbas Araghchi said over the weekend that Tehran had “not yet made a decision to restart negotiations with the United States.” At the same time, President Donald Trump has been warning that Iran faces continued pressure, while threatening to assert US control over Hormuz.
That leaves the immediate question less about whether the June deal will be extended and more about what replaces it.
What Was The June Deal Supposed To Do?
The MoU was signed on June 17 by Trump and Iranian President Masoud Pezeshkian after months of war. It was designed as a framework for ending the conflict, with the two sides declaring the “immediate and permanent termination of military operations” and agreeing to work towards a final agreement within 60 days. The period could be extended if both sides agreed.
The framework went beyond simply stopping the fighting.
Washington was expected to end its naval blockade within 30 days, ease sanctions, issue waivers for Iranian oil exports and allow Tehran access to frozen funds. The agreement also envisaged a reconstruction and development package for Iran of at least $300 billion.
Iran, meanwhile, was supposed to clear mines in the Strait of Hormuz and allow commercial ships to pass without charge for 60 days. Tehran also reaffirmed that it would not pursue nuclear weapons and agreed to negotiate the more complicated questions surrounding uranium enrichment.
But the two sides quickly began interpreting the agreement differently. The US accused Iran of failing to reopen Hormuz. Iran accused Washington of failing to lift the blockade and honour its commitments on sanctions and frozen assets.
By July 7, Trump had declared the agreement “over”. Iran subsequently said Washington had violated and suspended its commitments and that Tehran had done the same.
So Monday’s expiry is, in practical terms, the end of a framework that had already largely stopped functioning.
Hormuz: The Biggest Obstacle
If there is one issue that captures the current US-Iran standoff, it is the Strait of Hormuz. Iran insists that it controls the waterway and has made clear that commercial shipping will not return to normal simply because the 60-day deadline passes.
On Saturday, Iranian Deputy Foreign Minister Kazem Gharibabadi said, “This strait will be opened and closed only under Iran’s command.” He also demanded that Washington accept what he called the reality of US defeat.
Trump, meanwhile, has gone in the opposite direction. On Friday, he said: “After we finish defeating Iran, pretty soon I’ll be declaring the Hormuz Strait a territory of the United States.” He has also described the US naval blockade as a “Wall of Steel” and insisted that Washington has “total control” over the waterway.
Iran’s response was equally blunt. Gharibabadi said Hormuz “cannot be seized by a tweet or an aircraft carrier”, while insisting that the strait had been, and would remain, Iranian.
The disagreement is not merely rhetorical. Shipping through Hormuz has fallen sharply. Reuters reported that only five commodity vessels crossed on Saturday and none were recorded on Sunday, compared with 31 vessels the previous weekend. The UAE has also accused Iran of attacking three ADNOC-operated vessels in recent days, allegations Tehran has not accepted.
What Trump’s Recent Statements Tell Us
Trump’s messaging over the past two weeks has followed a familiar pattern: pressure on Iran, warnings of military escalation and, at the same time, an insistence that diplomacy remains possible.
On August 3, Trump called ongoing negotiations Iran’s “last chance” and warned Tehran that it could face “decapitation” if it failed to reach an agreement. He also said the US blockade would remain until there was a deal or “Total Surrender.”
Days later, his rhetoric shifted towards the economic consequences of the conflict. Speaking in New York on August 14, Trump told Americans that paying “a tiny little bit more for your gasoline” was worth the cost of preventing Iran from obtaining a nuclear weapon. At the same event, he again said he would declare Hormuz US territory after defeating Iran.
This suggests Washington is preparing the US public for the possibility that the confrontation, and its economic consequences, may continue rather than being resolved immediately after the MoU deadline.
US Treasury Secretary Scott Bessent has also signalled additional economic measures against Tehran. He said the US would combine economic isolation with the continuing blockade of Iranian ports.
Iran Hardens Its Position
Tehran’s recent statements suggest little interest in returning to the negotiating table simply to revive the June framework. Iran Supreme Leader Mojtaba Khamenei’s statements provide one of the clearest indications of Tehran’s current thinking. When the MoU was signed in June, the Supreme Leader made clear that he was not an enthusiastic supporter of the arrangement.
In a written statement carried by Iranian state media, he said he had “a different opinion” about the agreement but had ultimately authorised it after President Masoud Pezeshkian and other Iranian officials assured him that the country’s interests would be protected. He specifically warned that Iran would not accept additional US demands.
“If the American side wants to be greedy, we will not accept it,” Khamenei said. He nevertheless endorsed negotiations, stressing that face-to-face talks would not amount to accepting the American position.
His position hardened considerably after the agreement began to collapse. On July 18, Khamenei said repeated US breaches of the MoU had demonstrated that Trump’s signature was “utterly worthless and devoid of credibility.” He also warned Washington that Iran and its regional allies had “unforgettable lessons” for the United States. He accused the US of revealing its “true face” and described Washington as deceitful, irrational and unreliable.
Araghchi, too, has repeatedly argued that there was no ceasefire to extend because the June agreement was intended to end the war, not establish a temporary pause.
On Friday, he said, “We did not have a ceasefire in the first place that we would now want to extend. We had ‘the end of the war,’ and now there is a new situation.”
On Saturday, he went a step further, saying Iran had not yet decided whether to restart negotiations with Washington. Qatar and Pakistan are exchanging messages with Tehran, he said, but that did not amount to negotiations.
At the same time, Iran is working with Oman on a possible new system of shipping routes through Hormuz. Araghchi said the old routes were no longer functional and that a temporary route was being designed, but stressed that the reopening of shipping remained dependent on Washington meeting Iran’s conditions.
What Happens After August 17?
Back-channel diplomacy is likely to continue
The expiry of the MoU does not mean that all diplomacy stops. Qatar, Pakistan and Oman have all been involved in communicating with the two sides. Iran has explicitly said that messages are still being exchanged, even while denying that formal negotiations have resumed.
A new arrangement could therefore emerge outside the original 60-day framework – potentially starting with shipping and humanitarian issues before tackling the much harder questions of sanctions and Iran’s nuclear programme.
Hormuz will remain the immediate test
The most visible sign of whether tensions are easing will be shipping. If US and Iran can agree on a mechanism allowing commercial vessels to move safely through the strait, it could create space for wider negotiations.
If attacks, interceptions or competing blockades continue, however, the dispute could become harder to contain.
For the global economy, the stakes are substantial. Before the war, Hormuz handled about one-fifth of global oil and LNG flows. Reuters reported that Brent crude was around $88.72 a barrel early Monday, after gaining more than 5 per cent the previous week.
More US sanctions are likely
The US has already indicated that it intends to increase economic pressure. That could mean additional sanctions on Iranian financial networks, oil exports and entities accused of helping Tehran circumvent existing restrictions.
The objective would be to make the economic cost of continuing the confrontation increasingly difficult for Iran to absorb.
Military escalation remains a risk
There is no indication that the expiry itself automatically triggers a new military operation. But the conditions for escalation are clearly present. The US maintains its naval blockade, Iran continues to restrict shipping through Hormuz, and both governments are publicly warning the other against testing their resolve.
Iranian Army chief Major General Amir Hatami, responding to Trump’s comments on Hormuz, said joking about such a move was a mistake and warned that Iran had defenders who would “break your legs.” He also said US forces had been effectively driven out and would not be allowed to return to their previous position in the Gulf.
What about Iran’s nuclear programme?
This remains the biggest unresolved issue beneath the immediate Hormuz dispute. The June framework had pushed the nuclear question into negotiations for a final agreement. Iran had reaffirmed that it would not seek nuclear weapons, while Washington wanted restrictions on enrichment and stronger guarantees.
But the failure to even agree on the basic terms of the June MoU means that the nuclear question has effectively been pushed back.
That makes any future agreement more complicated: it would have to address not just a ceasefire and shipping, but sanctions, oil exports, frozen Iranian assets, the US military presence, nuclear restrictions and guarantees that neither side will simply walk away.
The most likely near-term scenario
The immediate picture is therefore unlikely to be either “peace” or “full-scale war”. The more probable scenario is a tense period of pressure and indirect diplomacy, with Washington using sanctions and its naval presence to force concessions, while Tehran uses Hormuz and its ability to disrupt regional commerce as leverage.
Both sides have powerful reasons to keep talking. The US wants the war brought to an end without appearing to concede to Iran. Tehran needs economic relief but has shown little willingness to accept an agreement it believes compromises its control over Hormuz or leaves Washington’s blockade intact.
The central question after August 17 is whether the two countries can find a new formula before the collapse of the old one turns the dispute over Hormuz, sanctions and Iran’s nuclear programme into another round of direct confrontation. For now, neither US nor Iran appears ready to blink.
