Why has the Iran-US ceasefire memorandum frayed?

Renewed US-Iran hostilities weaken June ceasefire deal amid disputes over Hormuz and peace efforts

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Reuters July 13, 2026 4 min read

People walk past a billboard featuring images of Iran's late Supreme Leader Ayatollah Ali Khamenei in Tehran, Iran, July 13, 2026. PHOTO: WANA/REUTERS

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Renewed US-Iranian hostilities are eroding an interim agreement signed in June, reflecting disagreements over the Strait of Hormuz and other issues and highlighting the difficulties facing efforts to secure a lasting peace.

The 14-point Islamabad Memorandum of Understanding (MoU) declared an end to the war and the reopening of the Strait of Hormuz to commercial vessels. But analysts say the wording was vague on key points, while difficult issues — notably the future of Iran's nuclear programme — were left for a second phase of negotiations.

What have the parties said recently about the deal?

US President Donald Trump declared the initial ceasefire agreement "over" last week, saying Iranian officials were not honouring deals they had negotiated.

On Monday, Trump said the United States would probably take over the Strait of Hormuz.

Iranian Foreign Ministry spokesperson Esmaeil Baghaei accused Washington on Monday of pushing the MoU "into crisis", saying the United States had repeatedly violated its commitments.

Mediator Pakistan has urged all sides to uphold their obligations under the agreement.

What is at issue in the Strait of Hormuz?

After the war began with US-Israeli strikes on Iran on February 28, Tehran effectively shut the Strait of Hormuz, a key waterway through which around a fifth of the world's oil and liquefied natural gas shipments pass.

Article 5 of the MoU says commercial vessel traffic would resume immediately and that Iran "will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only, from the Persian Gulf to the Sea of Oman and vice versa".

Tehran interprets this as US recognition of Iran's right to manage the waterway, although without charging fees or tolls for two months.

The United States and Gulf states reject that interpretation, saying the clause only requires Iran to facilitate safe passage and prevents it from imposing restrictions backed by force.

Washington has said the strait will remain toll-free.

Over the past week, Iran has fired on vessels it said attempted to use an unauthorised route through the waterway and declared the strait closed again.

The US Navy's Joint Maritime Information Centre said on Sunday that a southern route through the strait remains available and has been expanded to allow two-way traffic.

What is happening to US oil waivers for Iranian oil sales?

Article 10 states that Washington will issue waivers allowing the export of Iranian crude oil, petroleum products and related services, including banking, insurance and transportation.

The provision was a major gain for Iran, whose economy has been heavily affected by years of sanctions.

But on July 7, the United States revoked a licence allowing Iran to sell oil, warning that Tehran's actions in the Strait of Hormuz were "wholly unacceptable" and would face consequences.

Read More: Iran will never allow US to interfere in Hormuz, warns central military command

Iran condemned the move as a violation of the MoU.

What is the status of Iran’s frozen assets?

Article 11 says the United States "undertakes to make fully available for use the frozen or restricted funds and assets" of Iran, with Tehran and Washington to agree on procedures for releasing the funds during negotiations.

The assets include $6 billion held in Qatari accounts.

Qatar said on June 30 that it had not transferred the funds to Tehran.

On June 22, US Vice President JD Vance said the United States and Qatar would control the funds once they were unfrozen, adding that the money could be used to purchase US corn, soybeans and wheat.

Iran's Ambassador to the United Nations in Geneva, Ali Bahreini, stated that Iran alone would determine how to utilise any unfrozen assets.

How does Lebanon fit in?

Iranian parliament speaker and chief negotiator Mohammad Baqer Qalibaf said on July 8 that Israeli attacks in Lebanon represented a violation of the MoU.

Lebanon was drawn into the conflict after Iran-backed Hezbollah opened fire on Israel on March 2, triggering an Israeli offensive and an invasion of southern Lebanon.

Iran had said Israel must halt its operations in Lebanon as part of the agreement.

Where does this leave wider negotiations?

The MoU states that Washington and Tehran will negotiate a final agreement within a maximum of 60 days, extendable by mutual consent.

However, with control over the Strait of Hormuz disputed, neither side has announced a date for further talks.

It took years for Iran to negotiate its 2015 nuclear agreement with world powers. Trump withdrew the United States from that deal during his first term.

"The MoU is in crisis and you now need a secondary deal to restore it, if it is to be a basis for restoring calm," said Mohanad Hage Ali of the Carnegie Middle East Centre think tank.

"The vagueness reflected the difficulty of the issues and the fragility of the agreement."