Iran Threatens New Offensive as US Rules Out Extending Ceasefire

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Iran has warned it could shift to a “fully offensive” military posture after efforts to reach a permanent end to its war with the United States stalled, as Washington ruled out extending an interim agreement whose 60-day deadline expired Monday.

A senior Iranian official said Tehran was prepared to escalate tensions around the Strait of Hormuz and would carry out a “timely and precise” military attack to break what it describes as a U.S. naval blockade if diplomacy fails. The official said Iranian entities must be ready to make difficult decisions.

The warning came as the June 17 Memorandum of Understanding between the two countries has largely collapsed. That agreement, signed after the United States and Israel launched military operations against Iran on February 28, called for an immediate halt to all military operations and set a 60-day timetable for a broader settlement covering Iran’s nuclear program, sanctions and the reopening of the Strait of Hormuz.

President Donald Trump said Monday that the United States was not seeking to extend the interim arrangement.

The Strait of Hormuz has become the central obstacle to any final agreement. The narrow waterway carried about a fifth of global oil and liquefied natural gas trade before the war, but traffic has fallen to a small fraction of its previous level.

Iran argues the interim deal gave it a role in managing traffic through the strait, which it shares with Oman, and has demanded the lifting of the U.S. blockade, the withdrawal of American forces from around Iran and compensation for wartime damage. Washington has rejected that interpretation and says Iran should not control the waterway.

The dispute quickly unraveled the ceasefire. After the agreement was signed, Iran began firing on vessels using a route along the Omani side of the strait. The United States responded with strikes, canceled waivers that had allowed Iran to sell oil internationally, and restored a blockade of Iranian ports. Iran then attacked Arab countries hosting U.S. forces, including Jordan, Kuwait, Bahrain, Israel, Oman, the United Arab Emirates and Saudi Arabia.

Thousands of people have been killed in the conflict, mainly in Iran and Lebanon. A related truce in Lebanon between Israel and Iran-backed Hezbollah has mostly held, though Israeli troops still occupy parts of southern Lebanon.

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Neither side appears ready to compromise. Iran has continued to demand control over the strait through a separate agreement it is negotiating with Oman, potentially including transit fees. Trump has rejected those demands, arguing that Iran should pay war reparations and claiming the United States controls the waterway.

Despite the breakdown in formal talks, back-channel diplomacy has continued. Former Director of National Intelligence Tulsi Gabbard spoke with an Iraqi Kurdish leader with close ties to Iran’s Islamic Revolutionary Guard Corps, and through that intermediary the United States delivered a message to IRGC commander General Ahmad Vahidi, according to two people with direct knowledge. Trump later confirmed the discussions.

Jared Kushner, Trump’s special envoy, said conversations between the U.S. government and different parts of the Iranian government were “more robust than it’s maybe ever been.”

Iran has said it is close to a deal with Oman on managing the strait. Trump responded with a threat against the Gulf state, saying the United States would bomb Oman if it got in the way.

The regional fallout has widened. Iran-backed Houthi rebels in Yemen have begun attacking Saudi oil tankers in the Red Sea, threatening another vital trade route. Pakistan, which helped broker the June agreement, said it was still trying to bring both sides back to the negotiating table. “We are not closing the chapter,” Foreign Ministry spokesman Tahir Andrabi said.

The United States faces a difficult set of choices. Accepting Iran’s demands over the strait would be seen in Washington as admitting defeat on a critical international waterway. Further military escalation would draw down U.S. supplies of advanced missile interceptors, jolt the world economy and push fuel prices higher ahead of congressional elections.

Iran is under intense economic pressure as well. The war has compounded pre-existing inflation, currency weakness, energy shortages and sanctions. Damaged infrastructure, disrupted trade, lost production and the cost of rebuilding have added to the strain, while Iranian leaders worry that further economic pain could reignite unrest and erode the Islamic Republic’s legitimacy.

The economic consequences are already visible globally. Benchmark Brent crude futures surged during the conflict to a peak of $126 a barrel, roughly 75 percent above pre-war levels, before settling at $90.87 on Monday. U.S. gasoline prices have risen above $4 per gallon, up from under $3 before the war, according to automotive group AAA. Trump warned Americans at a rally Friday to prepare for continued high fuel prices.

With the interim agreement expired and the central dispute over the Strait of Hormuz unresolved, both Washington and Tehran face the same choice: return to serious diplomacy or accept further escalation. For now, neither side has shown signs of backing down.