Iran is preparing to take a "fully offensive" military posture after efforts to negotiate a permanent end to its war with the US stalled, a senior Iranian
official told Reuters on Monday. The warning came after US President Donald Trump ruled out extending a temporary ceasefire agreement between Washington and Tehran. Progress towards peace talks and the resumption of oil tanker traffic through the strategic Strait of Hormuz has also stalled, raising fears that the conflict could continue. The war began on February 28, when the US and Israel launched attacks on Iran. "Iranian entities must be prepared to escalate tensions in the Strait of Hormuz and wider region, as Iran will be ready to make decisions and take action on difficult decisions," the Iranian official told Reuters. The official added that Tehran would carry out a "timely and precise" military attack to break the US naval blockade if diplomatic efforts failed. A memorandum of understanding (MoU) signed in June had given Iran and the US 60 days to reach a final peace agreement. The agreement, signed on June 17, set out a framework for a broader deal covering Iran's nuclear programme and US sanctions. It called for the "immediate and permanent termination of military operations on all fronts". However, the agreement quickly fell apart over a dispute about control of the Strait of Hormuz. The narrow waterway is one of the world's most important energy routes. Before the war, around a fifth of global oil and liquefied natural gas shipments passed through the strait. When reporters asked Trump on Monday whether the US was seeking to extend the interim agreement reached in June, he said no.
US-Iran Back Channel Amid Ceasefire Deadlock
There has been one possible sign of diplomacy continuing behind the scenes.
Media reports said Trump had opened back-channel discussions with Iran's Islamic Revolutionary Guard Corps (IRGC), which has gained greater influence during the war and controls large parts of Iran's armed forces and economy.
Axios, citing two sources familiar with the matter, reported that former US Director of National Intelligence Tulsi Gabbard spoke to an Iraqi Kurdish leader with close ties to the IRGC.
Through that intermediary, the US reportedly delivered a message to IRGC commander General Ahmad Vahidi.
Fox News later reported that Trump confirmed the discussions in a telephone interview.
According to Axios, the Trump administration was concerned about whether Iranian negotiators at the peace talks had the authority to speak for the IRGC. Reuters has separately reported that Vahidi had become a key figure during the conflict.
Vahidi, according to Axios, said he was aligned with the Iranian negotiators.
Jared Kushner, Trump's son-in-law and special envoy, also suggested that discussions between Washington and different parts of the Iranian government were continuing.
"I can't go into the details of it, but I will say that the conversations between the US government and different areas of the Iranian government at all areas is probably more robust than it's maybe ever been," Kushner told Fox News chief foreign correspondent Trey Yingst on Monday.
Trump Threatens Oman Over Strait Dispute
The Strait of Hormuz remains one of the biggest points of disagreement.
Iran has said that point five of the June MoU gives it the right to manage the strait, which it shares with Oman. The US has rejected that interpretation.
Hostilities resumed after Iran began firing on vessels that it said were attempting to sail through the strait using an unauthorised route. Trump declared the pact "over" on July 7.
The Iranian official told Reuters that the US would have to fulfil all provisions of the MoU within a few weeks before Tehran would consider further negotiations.
At the same time, Iranian leaders are concerned that further US economic pressure could worsen conditions inside the country, trigger renewed unrest and further weaken the government's legitimacy, three Iranian officials told Reuters.
Iran entered the war already facing high inflation, a weakening currency, energy shortages, sanctions and wider economic problems. The conflict has added damaged infrastructure, disrupted trade, lost production and the cost of rebuilding.
Iran is separately negotiating an agreement with Oman on managing the Strait of Hormuz and has said the two sides are close to a deal.
Trump, however, has threatened Oman over its involvement.
"If Oman gets in the way, we'll bomb the shit out of them," Trump told Fox News.
Thousands of people have been killed in the conflict, mainly in Iran and Lebanon. Iran has also attacked US military bases and infrastructure in countries including Oman, Jordan, Kuwait, Israel, the United Arab Emirates and Saudi Arabia.
Trump warned Americans at a rally on Friday to prepare for continued high fuel prices as a result of the war.
Benchmark Brent crude oil prices have risen sharply during the conflict, reaching a peak of $126 a barrel, around 75% above pre-war levels. Brent settled more than $2 higher on Monday at $90.87 a barrel.
In the US, petrol prices have also risen above $4 a gallon, compared with less than $3 before the war, according to motoring group AAA.
With the ceasefire extension now ruled out by Washington and Iran threatening a more aggressive military posture, the future of the peace process remains uncertain. Any further escalation around the Strait of Hormuz could also put fresh pressure on global oil supplies and fuel prices.
