Iran announced it has ended its agreement with the United States, accusing the US of breaching the ceasefire by strengthening a naval blockade. This move comes after Washington resumed military strikes and maintained the blockade, actions cited by Iran as violations of last month's Islamabad Memorandum.
Background on the Islamabad Memorandum
The Islamabad Memorandum was signed to de-escalate tensions by lifting the US blockade on the Strait of Hormuz, a vital route for global oil shipments. The agreement aimed to restore freedom of navigation and reduce military confrontations in the region. However, recent US actions have led to a breakdown in cooperation, with both nations shifting towards heightened military readiness.
Markets have responded to the shift, pricing in a lower probability of the blockade ending by July 24, 2026. This is reflected in declining odds over various timeframes, signaling increased skepticism about a diplomatic resolution in the near term.
The situation remains highly volatile as observers await possible statements or responses from US President Trump or Iran's Supreme Leader Ali Khamenei. Any developments could influence the trajectory of escalating tensions or potentially revive diplomatic talks.
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