US and Iran Exchange Strikes; Tehran Closes Hormuz Again Amid Intensified Diplomacy
The US and Iran traded fresh strikes as Tehran again closed the Strait of Hormuz, while mediators in Oman continue efforts to salvage diplomatic solutions.
What happened, yesterday
- Escalation12 Jul US forces launched a third round of strikes against Iran, retaliating for an Iranian attack on a commercial container ship in the Strait of Hormuz.
- Escalation12 Jul Iran's Islamic Revolutionary Guard Corps (IRGC) struck the Cyprus-flagged M/V GFS Galaxy in the Strait of Hormuz and declared the vital waterway closed until further notice.
- Escalation12 Jul The IRGC claimed to have targeted the US air base at Al Udeid in Qatar with ballistic missiles and struck a US command and control center and drone hangars at Prince Hassan Air Base in Jordan.
- Escalation12 Jul Iran's Supreme Leader Mojtaba Khamenei vowed revenge for the killing of his father, stating that vengeance is the will of the nation and must be carried out.
- Diplomacy12 Jul Omani and Iranian negotiators are continuing talks to discuss appropriate mechanisms for the safe passage of ships through the Strait of Hormuz, despite the renewed escalation.
- Escalation12 Jul Israel conducted an airstrike in southern Lebanon, targeting alleged Hezbollah operatives moving anti-tank missiles and other weapons.
- Escalation12 Jul The United Arab Emirates Defense Ministry reported that its air defense systems responded to a missile and drone attack launched by Iran.
The story
The Middle East saw a renewed surge in military activity as the United States and Iran exchanged fresh strikes early Sunday. Tehran's Islamic Revolutionary Guard Corps (IRGC) attacked the M/V GFS Galaxy, a commercial vessel in the Strait of Hormuz, and subsequently declared the critical waterway closed. This action prompted a third round of US retaliatory strikes, with the Pentagon stating it aims to degrade Iran's ability to attack commercial shipping. In response, Iran claimed to have struck a US air base in Qatar and a command center in Jordan. The escalation follows an exchange of rhetoric, including President Trump's threat of "decimation" if Iran attempts to assassinate him, and Iran's new Supreme Leader Mojtaba Khamenei vowing revenge for his father's death. Amidst this, diplomatic efforts continue, with Oman hosting talks between Iranian and Omani foreign ministers to discuss safe passage through the Strait. The fragile interim agreement appears severely tested, highlighting the persistent tension between military actions and ongoing attempts at de-escalation.
Who moved today
| Actor | What changed | Consequence |
|---|---|---|
| US | Launched a third round of strikes against Iran, targeting missile, drone, and naval capabilities. | This action aims to degrade Iran's military infrastructure but further escalates direct military confrontation with Tehran. |
| Iran | Struck a commercial vessel in the Strait of Hormuz, declared the strait closed, and attacked US bases in Qatar and Jordan. | These actions directly challenge international shipping and US regional presence, raising the risk of broader conflict. |
| Oman | Continued to host diplomatic discussions with Iranian officials regarding safe passage through the Strait of Hormuz. | Oman maintains its role as a key mediator, providing a crucial channel for de-escalation amidst heightened tensions. |
| Israel | Conducted an airstrike in southern Lebanon targeting alleged Hezbollah operatives. | This move keeps pressure on Iranian-backed proxies and highlights the interconnectedness of regional conflicts. |
| United Arab Emirates | Its air defense systems responded to incoming missile and drone attacks attributed to Iran. | The UAE directly experienced the impact of Iran's retaliatory actions, underscoring the regional spread of the conflict. |
Three ways this might unfold
A diplomatic breakthrough leads to a new, more robust agreement on regional security and nuclear oversight. ~20%
If ongoing mediation efforts in Oman and other channels yield a concrete, verifiable agreement on the Strait of Hormuz and Iran's nuclear program, coupled with a commitment to de-escalation by all parties,
- Military activity in the Gulf would significantly decrease, leading to a de-facto ceasefire.
- International sanctions on Iran, particularly oil waivers, could see substantial adjustments.
- The Strait of Hormuz would reopen for unrestricted international shipping, stabilizing global trade routes.
- Regional stability would improve, potentially leading to renewed economic cooperation among Gulf states.
- The focus would shift towards verifying Iran's nuclear commitments and implementing regional confidence-building measures.
- Oil prices would likely experience a notable decline as supply concerns ease.
A direct military confrontation between the US and Iran, potentially involving regional allies, erupts into a full-scale conflict. ~45%
If Iran continues its aggressive actions in the Strait of Hormuz and targets US or allied assets, and the US responds with further significant, sustained military strikes,
- The Strait of Hormuz would face a prolonged and complete closure, severely disrupting global oil and gas supplies.
- Widespread military engagements across the Gulf and potentially into Iranian territory would become likely.
- Regional proxies would activate, leading to increased attacks on Israel and Gulf states.
- Cyber warfare capabilities would be fully deployed by all involved parties, impacting critical infrastructure.
- International diplomatic efforts would shift from mediation to crisis management and humanitarian aid.
- A significant increase in defense spending across the region and among major powers would occur.
- There would be a mass exodus of foreign nationals from affected Middle Eastern countries.
A volatile status quo persists, characterized by intermittent strikes, diplomatic posturing, and localized skirmishes without major escalation or de-escalation. ~35%
If both sides continue tit-for-tat military actions and strong rhetoric, while maintaining back-channel diplomatic engagement that yields no decisive breakthrough or breakdown,
- Shipping in the Strait of Hormuz would remain vulnerable to intermittent disruptions and increased insurance costs.
- US military presence in the region would stay elevated, conducting defensive and retaliatory operations.
- Iran would continue its nuclear program, possibly pushing enrichment levels, while denying weaponization intent.
- Regional proxies like Hezbollah would maintain a state of readiness, engaging in periodic skirmishes.
- Diplomatic efforts would remain stalled, with mediators struggling to achieve concrete progress.
- Economic uncertainty would persist, impacting investment and trade flows in the broader Middle East.
- The risk of miscalculation leading to accidental escalation would remain high.
Around the world
| Country | What changed | Deduction |
|---|---|---|
| 🇺🇸 United States | Launched a third round of strikes against Iran in retaliation for attacks on commercial shipping. | Reaffirms its commitment to protecting international maritime routes and degrading Iran's offensive capabilities. |
| 🇶🇦 Qatar | An Iranian ballistic missile strike reportedly targeted the US air base at Al Udeid, destroying a fighter jet maintenance center and command facility. | The nation's territory, housing a significant US military presence, became a direct target in the escalating US-Iran conflict. |
| 🇦🇪 United Arab Emirates | Its air defense systems responded to missile and drone attacks launched by Iran. | Experiences direct threats from Iranian retaliation, underscoring the broader regional impact of the conflict. |
| 🇯🇴 Jordan | Iran's IRGC claimed to have struck a US command and control center and drone hangars at Prince Hassan Air Base. | Becomes a site of direct Iranian targeting of US military interests, broadening the geographical scope of attacks. |
Threads worth pulling
Killing of Ali Khamenei → Mojtaba Khamenei's Vows of Revenge → Hardening of Iran's Negotiating Stance The death of the former Supreme Leader and his successor's public calls for vengeance may solidify a more confrontational approach from Iran in any future diplomatic engagements.
Strait of Hormuz Closure → Increased Shipping Costs and Delays → Global Supply Chain Disruptions Iran's closure of the Strait of Hormuz forces commercial vessels to reroute or halt, leading to higher insurance premiums and longer transit times, impacting global trade and consumer prices.
US Sanctions on Iranian Oil Waivers Ended → Iran's Economic Pressure → Increased Motivation for Maritime Disruption The termination of waivers allowing Iran to sell crude oil by the US amplifies Iran's economic strain, potentially increasing its motivation to disrupt vital shipping lanes as leverage.
Israeli Strikes in Southern Lebanon → Hezbollah's Response Preparedness → Heightened Israel-Lebanon Border Tensions Israeli military actions against alleged Hezbollah operatives in Lebanon directly contribute to a cycle of readiness and potential retaliation, further destabilizing the border region.
US Threats of 'Decimation' → Iranian Cyber Activity → Escalation in Non-Conventional Warfare President Trump's strong threats against Iran could prompt Tehran to intensify its cyber warfare capabilities, leading to an escalation in digital attacks against US and allied infrastructure.
What others are saying
Carnegie Endowment (Aaron David Miller). The ongoing peace talks between the United States and Iran are creating a strain on the relationship between Washington and Israel.
Soufan Center. The path to peace between the U.S. and Iran is obstructed by 'minefields,' and despite a ceasefire being tested, challenges persist in the Strait of Hormuz.
Stimson Center (Olli Heinonen). The conflict has expanded beyond initial Israeli strikes on Iran's nuclear facilities, now involving attacks on civilian infrastructure and significant retaliatory responses from Iran.
RBC Capital Markets (Helima Croft). Iran's diplomatic signals often conflict with its military actions, and the IRGC maintains a firm grip on the Strait of Hormuz amidst regional escalation.
What we’ll be watching
- Iran's official statement and actions regarding the Strait of Hormuz closure.
- Any further US military responses to Iranian attacks on shipping or regional bases.
- The outcome of ongoing Oman-mediated talks concerning safe passage in the Strait.
- Statements or actions from Iran's Supreme Leader Mojtaba Khamenei or President Trump.
- Any new Israeli military operations in Lebanon or against Iranian interests.
- Reactions and security measures from Gulf Cooperation Council (GCC) states following recent Iranian attacks.
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