US Strikes Iran, Revokes Oil Waiver After Hormuz Attacks; Tehran Retaliates Against US Bases
A sharp escalation unfolded as the US launched new strikes and revoked an oil sales waiver, prompting Iranian retaliation and jeopardizing the fragile ceasefire ahead of July 11 talks.
What happened, yesterday
- Escalation08 Jul US Central Command launched new strikes against over 80 Iranian targets, including air defense systems and IRGC boats, in response to attacks on three commercial vessels in the Strait of Hormuz.
- Escalation08 Jul The US Treasury Department revoked a temporary license allowing Iran to sell oil, citing Iranian attacks on commercial shipping in the Strait of Hormuz.
- Escalation08 Jul Iran's Islamic Revolutionary Guard Corps (IRGC) claimed retaliatory strikes using drones and missiles against 85 US military facilities in Bahrain and Kuwait, also stating they downed an MQ-9 drone.
- Diplomacy08 Jul Iran's Foreign Ministry condemned the US actions, accusing Washington of violating the Islamabad Memorandum of Understanding and warning of "decisive measures" to protect its interests.
- Diplomacy03 Jul US officials reportedly warned Iran about suspected Israeli intentions to assassinate top Iranian negotiators, including Foreign Minister Abbas Araghchi and parliamentary speaker Mohammad Bagher Ghalibaf.
- Diplomacy11 Jul US and Iranian negotiators are still expected to resume talks in Pakistan, with nuclear discussions, sanctions, and frozen assets on the agenda, despite the recent escalation.
The story
The Strait of Hormuz has once again become a flashpoint, with the US launching a new wave of strikes against Iranian targets after three commercial vessels were attacked. This escalation was met swiftly by Iranian retaliation, targeting US military facilities in Bahrain and Kuwait. Washington also revoked a temporary waiver for Iranian oil sales, a move Tehran decried as a violation of the Islamabad Memorandum of Understanding. These actions threaten to unravel the fragile ceasefire and cast a shadow over the upcoming US-Iran nuclear talks scheduled for July 11, where discussions on sanctions relief and frozen assets are already sensitive. The tit-for-tat exchanges underscore the persistent instability in the region and the challenges to achieving a lasting diplomatic resolution.
Who moved today
| Actor | What changed | Consequence |
|---|---|---|
| US | Launched over 80 strikes against Iranian targets and revoked a temporary license for Iranian oil sales. | This action was a direct response to attacks on commercial vessels in the Strait of Hormuz, aiming to impose costs on Iran. |
| Iran | Retaliated with drone and missile strikes on 85 US military facilities in Bahrain and Kuwait, and condemned the US oil waiver as a violation of the existing agreement. | This demonstrates Iran's commitment to immediate counter-escalation and its rejection of US pressure. |
| Bahrain & Kuwait | Sounded missile alert sirens and announced active responses to incoming aerial attacks from Iran. | This indicates direct impact and heightened alert levels for US allies in the Gulf. |
Three ways this might unfold
A deal is reached if US-Iran negotiations make significant progress on nuclear issues, sanctions, and Strait of Hormuz navigation. ~20%
If the July 11 talks yield significant progress on nuclear issues, sanctions, and Strait of Hormuz navigation.
- Iran agrees to broader IAEA inspections.
- US lifts key sanctions, unfreezing Iranian assets.
- Strait of Hormuz transit fees are standardized and agreed upon.
- Regional proxy activity sees a verifiable de-escalation.
- Gulf states re-engage in direct security dialogues with Iran.
- Oil prices stabilize as supply concerns ease.
- US military presence in the Gulf potentially re-evaluated.
- Israel-Lebanon border tensions decrease.
Escalation occurs if the current cycle of strikes intensifies or the July 11 talks collapse. ~50%
If the current cycle of strikes and counter-strikes intensifies, particularly around the Strait of Hormuz, or if the July 11 talks collapse.
- Further military strikes by both US and Iran become more frequent.
- Shipping in the Strait of Hormuz faces severe disruptions, increasing insurance costs.
- Regional allies of both sides are drawn deeper into the conflict.
- Oil prices surge significantly due to supply fears.
- Cyberattacks targeting critical infrastructure increase.
- Diplomatic efforts are suspended indefinitely.
- Iran accelerates its nuclear program beyond current limits.
- Calls for a broader international intervention intensify.
Status quo persists if limited strikes, diplomatic posturing, and stalled negotiations continue. ~30%
If the current pattern of limited strikes, diplomatic posturing, and stalled negotiations continues without a clear breakthrough or breakdown.
- Intermittent, localized military actions persist without widening.
- Indirect talks continue with minimal tangible progress.
- Strait of Hormuz remains a contested but navigable waterway.
- Sanctions largely remain in place, with limited waivers.
- Regional tensions remain high, but below full-scale conflict.
- No significant changes in oil market dynamics.
- Proxy forces maintain current levels of activity.
- International bodies issue calls for restraint without enforcement.
Around the world
| Country | What changed | Deduction |
|---|---|---|
| 🇺🇸 United States | Launched new strikes on Iran and revoked an oil sales waiver. | This indicates a heightened military posture and increased economic pressure on Tehran. |
| 🇮🇷 Iran | Retaliated against US military bases in Bahrain and Kuwait, and condemned US actions as a violation of prior agreements. | This signals Iran's resolve to respond to perceived aggressions and its rejection of US unilateral moves. |
| 🇮🇳 India | Plans to expand strategic oil reserves. | This suggests a proactive measure to enhance energy security due to the vulnerability to oil price spikes from the Iran war. |
Threads worth pulling
US oil waiver revocation → Iranian revenue reduction → Increased reliance on proxy groups The US revoking the oil waiver reduces Iran's state income, potentially pushing Tehran to rely more heavily on its proxy networks for regional influence and operations.
Strait of Hormuz attacks → Higher shipping insurance costs → Global inflation pressure Attacks on commercial vessels in the Strait of Hormuz increase insurance premiums for shipping, which translates to higher costs for goods and contributes to global inflationary pressures.
US warning to Iran about Israeli assassinations → Strain in US-Israel relationship → Reduced US leverage over Israeli actions The US directly warning Iran about Israeli assassination plots highlights a divergence in war aims and suggests the US has limited influence over Israel's independent operations.
Fragile ceasefire → Renewed military strikes → Delays in nuclear deal The ongoing fragility of the ceasefire, evidenced by recent strikes, directly impedes the progress of diplomatic negotiations aimed at a comprehensive nuclear agreement.
What others are saying
The Soufan Center. Irrespective of whether a deal is reached to end the ongoing U.S.-Israeli war against Iran, it seems likely that Tehran will continue to cultivate a network of proxy groups, viewing them as strategic depth.
Carnegie Endowment for International Peace (Aaron David Miller). The U.S.-Israel relationship shows divergence of war aims and the Israeli prime minister's determination to undermine any negotiation the U.S. might conclude.
Stimson Center (Nicole Grajewski). Iran has been debating whether to cross the nuclear weapons threshold in reaction to its increased sense of insecurity, which would complicate efforts to defuse tensions with Israel or improve ties with the next US president.
What we’ll be watching
- Iran's official statement regarding the July 11 talks.
- US or Iranian statements on further military actions in the Strait of Hormuz.
- Reports on the impact of Iranian retaliatory strikes in Bahrain and Kuwait.
- Any new developments regarding the US oil waiver and its economic effects.
- Statements from Gulf Cooperation Council (GCC) members on regional security.
- Progress or breakdown in the Israel-Lebanon security talks.
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