Strait of Hormuz ambiguity triggered collapse of US-Iran truce – Analysts

Uncertainty over control of the Strait of Hormuz was a major factor behind the breakdown of the fragile truce between the United States and Iran, a development that contributed to a sharp rise in global oil prices, according to analysts.

Speaking on the latest edition of the Drinks and Mics podcast hosted by Ugo Obichukwu, Amaka Anku, Head of Africa Coverage at Eurasia Group, said vague provisions in the agreement between Washington and Tehran created the conditions for the eventual collapse of the ceasefire.

The United States and Iran had signed a memorandum of understanding (MOU) on June 18, paving the way for the reopening of the Strait of Hormuz, a key maritime corridor through which roughly 20% of global oil and gas supplies pass.

The agreement reportedly included sanctions relief, the unfreezing of Iranian assets, and reconstruction support for Iran.

However, the ceasefire later broke down after Iran attacked merchant vessels transiting the Strait near the Oman coastline. The United States responded with strikes on Iranian military installations and infrastructure, prompting retaliatory attacks by Iran on U.S. military facilities and allied Gulf states.

According to Anku, the peace deal failed largely because it did not clearly define who would exercise authority over the strategic waterway.

She noted that such ambiguity is often built into diplomatic agreements to secure buy-in from opposing parties.

Anku explained that control of the Strait is central to Iran’s geopolitical leverage, while the United States views unrestricted navigation through the waterway as a critical strategic objective.

She said tensions escalated when more vessels began using routes closer to Oman’s territorial waters, effectively reducing Tehran’s influence over maritime traffic.

Providing a market perspective, Arnold Dublin-Green, Managing Director and Chief Executive Officer of Asset Management at Renaissance Capital Africa, said Iran has already suffered an estimated $200 billion in losses due to the disruption.

He noted that shipping activity through the Strait has declined sharply, with weekly vessel traffic falling from an average of 36 ships before July 7 to just 11 vessels per week.

According to Dublin-Green, the disruption has already driven international oil prices up by about 14%, with benchmark crude prices potentially returning to the $90–$100 per barrel range if tensions persist.

He also argued that geopolitical circumstances make a quick resolution unlikely.

Dublin-Green added that while the United Kingdom and France are focused on maritime security operations, countries such as Japan and China have largely confined their responses to diplomatic appeals for restraint.

The discussion also touched on the broader geopolitical implications of the conflict.

Tunji Andrews, Chief Executive Officer of Awabah, argued that the conflict has created a dangerous situation in which neither side can retreat without appearing weak.

He suggested that the absence of moderate voices within Iran’s leadership has reduced the prospects for a negotiated settlement.

The panel further examined whether economic incentives, such as transit fees for vessels using the Strait, could provide a path toward de-escalation. However, the conversation broadened to include concerns over mounting global instability, including the ongoing Russia-Ukraine conflict.

Anku linked these developments to Eurasia Group’s “G-Zero” framework, which describes a world where no single power—or coalition of powers—is willing or able to coordinate responses to major international crises.

Despite recent tensions, oil prices eased on Monday after the United States and Iran paused attacks over the weekend, raising hopes that diplomacy could help restore stability and allow shipping activity through the Strait of Hormuz to resume.

Brent crude futures fell by more than 5%, dropping $4.89 to $91.89 per barrel after briefly trading below the $90 mark. U.S. West Texas Intermediate (WTI) crude also declined by 5.23% to $84.64 per barrel.

Both benchmarks retreated to their lowest levels in nearly a week after recording gains over the previous three weeks, reflecting growing market expectations that diplomatic efforts could reduce supply risks in the region.