The United States and Iran signed a ceasefire memorandum at Versailles in June 2026, brokered by Pakistan and Qatar. The deal gave both sides 60 days to end the war and cap Iran's nuclear program. It required Iran to keep the Strait of Hormuz open for commercial ships and the US to lift its naval blockade and provide sanctions waivers. That deadline expired Monday, August 17, with no extension and no deal. Both sides say the other cheated first. Oil prices closed near $88 a barrel on Monday. Markets are pricing in a long standoff.

1. Escalate — Iran Can Still Be Beaten (President Trump, Scott Bessent, Nikki Haley)

Diplomacy is done. The US beat Iran militarily; time to press that advantage.

The Strait of Hormuz is going to be American territory. That's President Trump's stated plan. Earlier this week, he declared: "After we finish defeating Iran...I'll be declaring the Hormuz Strait a territory of the United States." On Monday, he told Fox News that if Oman "gets in the way," he'll "bomb the shit out of them."

Any deal just rebuilds what the US destroyed. Nikki Haley, the former UN ambassador, called the June MOU a mistake from the start. Iran, she wrote, "will use that money the way they always do — to further their nuclear ambitions and on terrorist proxies against us. It's a huge mistake to pay to rebuild the threat we just destroyed." Treasury Secretary Scott Bessent signaled what comes next: "never before seen" sanctions.

2. But the US Is Running Out of Levers (Barbara Slavin, Nina Srinivasan Rathbun, Arms Control Association, Sen. Tim Kaine)

The US already burned through its military and economic tools. Iran has more leverage now than before the war started.

The two sides had incompatible demands from day one. Political scientist Nina Srinivasan Rathbun argues the breakdown was predictable. Iran wanted to negotiate nuclear guarantees only; Trump demanded ballistic missile restrictions and caps on Iran's regional militias — issues that weren't in the 2015 nuclear deal and weren't on the table in June. "For diplomacy to be successful," she wrote, "both sides need to agree on the issues subject to negotiation."

The US has fewer options than it claims. Barbara Slavin, distinguished fellow at the Stimson Center, told Al Jazeera the US has depleted its interceptor missile stocks and drained its strategic oil reserves. She also noted the USS Abraham Lincoln has been at sea for over 260 days. Multiple sailors attempted to go overboard during that deployment. Families reported food shortages, water contamination, and basic supply failures. Trump dismissed the concerns: the ship "hasn't been deployed nearly long enough." "There are not many levers left for Trump if he wants to exert more pressure on Tehran," Slavin said.

The 60-day timeline was always too short. Kelsey Davenport, director for nonproliferation policy at the Arms Control Association, and executive director Daryl Kimball called the MOU "a flawed but welcome development." They noted it "does not block Iran's pathways to nuclear weapons" and that 60 days was far too compressed for serious nuclear talks. Sen. Tim Kaine plans to introduce a Senate resolution barring military action against Oman when Congress returns from recess.

3. And Iran Isn't Interested in Another Deal (Abbas Araghchi, Mohammad Bagher Ghalibaf, IRGC)

Iran absorbed the war, held the Strait, and believes it came out ahead.

Iran hasn't decided whether to talk to the US at all. Foreign Minister Abbas Araghchi said Monday: "We have not yet made a decision to restart negotiations with the US." Parliament Speaker Mohammad Bagher Ghalibaf put it more directly: "I can say with complete conviction that we truly emerged victorious in this war."

Iran didn't break the deal — the US broke it first. That's the argument from Mostafa Khoshcheshm, a professor at the University of Applied Sciences in Tehran. The US never released frozen Iranian assets, kept its naval blockade, and didn't secure an Israeli withdrawal from Lebanon. "The ceasefire stopped and was rendered obsolete after the US didn't comply," he said.

Iran is already rearming. The IRGC has consolidated control over Iran's regular military, placed veterans in key command positions, and ramped up missile and drone production. Per intercepted communications reported by Gulf News, Iran's planning includes sabotage of undersea internet cables and political agitation in Shia communities in Kuwait and Bahrain. A senior IRGC official warned adversaries to expect "strategic surprises."

Where This Lands

Iran's nuclear program remains uncapped. The Strait of Hormuz is still contested. Saudi Arabia, Turkey, and Pakistan signed a mutual defense pact earlier this month. US allies in the region are building their own security arrangements without waiting for Washington. Trump says there is more pressure to apply. Slavin says the tools for that pressure are spent. Tehran says the war already ended in its favor.

Sources