{"id":214922,"date":"2026-07-20T13:37:11","date_gmt":"2026-07-20T13:37:11","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/214922\/"},"modified":"2026-07-20T13:37:11","modified_gmt":"2026-07-20T13:37:11","slug":"since-islamabad-mou-whats-changed-for-the-us-iran-and-the-gulf-explainer","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/214922\/","title":{"rendered":"Since Islamabad MoU: What\u2019s changed for the US, Iran and the Gulf? | Explainer"},"content":{"rendered":"

For the ninth consecutive night, the United States mounted attacks on Iran\u2019s defence facilities and maritime capabilities into the early hours of Monday, with Tehran hitting back in tit-for-tat strikes as warning sirens blared in neighbouring Gulf countries and Jordan, home to US military bases.<\/p>\n

Both sides have accused each other of violating the memorandum of understanding (MoU) they had signed in Islamabad, Pakistan, on June 17. US President Donald Trump has said he views the truce as over, while Iran has said it no longer intends to adhere to the MoU.<\/p>\n

Meanwhile, the Strait of Hormuz \u2014 through which 20 percent of the world\u2019s oil and gas passed during peacetime \u2014 is shut again,\u00a0sending crude prices shooting up yet again. On Sunday, the US military said another American service member had been killed late last week, bringing the total number of deaths to 17.<\/p>\n

So, what has changed in the last two months for the US, Iran and the Gulf countries as the MoU has unravelled in terms of economic impact, widening of military targets, and how they view the war?<\/p>\n

\"AA billboard depicting US President Donald Trump lying in a coffin on a building in Tehran, Iran, July 18, 2026 [Majid Asgaripour\/West Asia News Agency via Reuters]Economy<\/p>\n

The Strait of Hormuz \u2014 the kill switch of the global economy \u2014 has been closed down by Iranian authorities, warning that not even a drop of oil shall pass through the waterway amid US attacks and a naval blockade against Iran\u2019s ports.<\/p>\n

The MoU had paved a path for the reopening of the strait. And that had briefly pulled oil prices to par with pre-war levels.<\/p>\n

The GCC<\/p>\n

The strait is of critical importance, especially for Gulf Cooperation Council (GCC) states, which saw their economic security and energy strategy severely affected by export curbs. The war on Iran has brought about the largest disruption to global oil and liquefied natural gas (LNG) supplies in modern history.<\/p>\n

The costs go beyond just energy revenue losses, noted Mohammad Reza Farzanegan, an economist at Germany\u2019s Marburg University.<\/p>\n

\u201cThe conflict also threatens the GCC countries\u2019 diversification strategies. Tourism, aviation, logistics, construction, real estate and foreign investment all depend on perceptions of regional stability,\u201d he told Al Jazeera. \u201cContinued war increases insurance and transport costs and encourages investors and tourists to reconsider their exposure to the region.\u201d<\/p>\n

Iran<\/p>\n

For Iran, the MoU lifted the naval blockade against Iranian ports and offered oil and banking sanctions waivers, and Tehran rushed to export tens of millions of barrels of crude oil.<\/p>\n

The earlier US blockade had curbed Iranian exports, with Iran\u2019s parliament speaker and chief negotiator, Mohammad Bagher Ghalibaf, telling Iranian state TV in an interview last month that \u201cwe did not export even one barrel\u201d during the blockade.<\/p>\n

However, as fighting resumed, the US disabled a vessel in the Strait of Hormuz, reported to be carrying Iranian crude. Tehran has also hit commercial vessels in the waterway, and the US has been bombing Iran\u2019s coastal areas since then.<\/p>\n

\u201c[The renewed US naval blockade] is more damaging than conventional sanctions because the restrictions are now enforced physically,\u201d said Farzanegan. \u201cIran therefore has much less room to use intermediaries, alternative flags and informal shipping arrangements to maintain oil exports.\u201d<\/p>\n

\u201cThe immediate consequences are lower foreign-exchange revenues, further depreciation of the rial and stronger inflationary pressure,\u201d the economist told Al Jazeera.<\/p>\n

Iran\u2019s economy has been suffering from one of the world\u2019s highest inflation rates. The rial touched nearly 1.9 million against the US dollar this week, a new all-time low. The Tehran Stock Exchange\u2019s main index lost another 120,000 points or 2.4 percent on Saturday to stand at 4.77 million.<\/p>\n

The US<\/p>\n

Trump\u2019s war has been widely unpopular in the US. The president recorded a 60 percent disapproval rating on the economy, as per the latest CNBC polling, with a net approval rating of -22, reported to be the lowest of his political career.<\/p>\n

As per the poll, 61 percent of respondents said they are pessimistic about the state of the economy, the highest percentage since December 2023.<\/p>\n

\u201cThe effects are most visible in energy prices and consumer purchasing power. This increases household costs and complicates the political position of President Trump and Republican candidates ahead of the November 2026 congressional elections,\u201d said Farzanegan.<\/p>\n

\"AA vessel in the Strait of Hormuz, as seen from Musandam, Oman, July 16, 2026 [Reuters]MilitaryThe US<\/p>\n

The US military has had 17 personnel killed in the war with Iran so far. Three of them have been killed since the resumption of the war about 10 days ago.<\/p>\n

\u201cWe hit them very hard again tonight,\u201d Trump said on Sunday, adding, \u201cWe did that in honour of the \u2013 probably three \u2013 it\u2019s probably three great patriots.\u201d<\/p>\n

Two US personnel were killed in an Iranian attack on an airbase in Jordan on Friday, and a third is missing. Another soldier was killed last week in Iraq while defusing unexploded ordnance from an Iranian drone.<\/p>\n

Tehran has claimed to have hit several US military facilities in Kuwait, Bahrain, and Jordan, including an aircraft at Aqaba airport.<\/p>\n

Al Jazeera could not immediately verify the extent of damage to any facilities.<\/p>\n

The Gulf<\/p>\n

The renewed attacks from Iran on most Gulf countries, as well as Jordan, have forced them to deploy their interceptors. GCC countries had already used hundreds of expensive interceptors during the first phase of the US-Israel war on Iran in March and April.<\/p>\n

But the Iranian military\u2019s attacks have also hit civilian infrastructure in Gulf countries. The bombing of power and desalination plants in Kuwait has drawn widespread regional condemnation.<\/p>\n

\u201cWhat is happening is a severe shock to the GCC countries,\u201d Nader Habibi, an Iranian-American economist, told Al Jazeera. \u201cNow, after the disruptions of the past seven months, even as they have tried to avoid getting involved, the civilian population is indirectly impacted.\u201d<\/p>\n

Iran<\/p>\n

The US insists that it has focused its attacks on Iran\u2019s military infrastructure, especially on the country\u2019s southern islands \u2014 some of which act as forward military or surveillance posts, and others that are believed to host missile bunkers.<\/p>\n

But Tehran has accused the US of targeting civilian infrastructure as well in recent days, including bridges and tunnels, ports and dock facilities, power stations and water plants. Iranian officials have said more than 50 people have been killed and about 500 wounded in US attacks in the past three weeks.<\/p>\n

Narrative<\/p>\n

More than the war itself, a significant part of the messaging from the US and Iran has been over the control of the Strait of Hormuz.<\/p>\n

The US<\/p>\n

Washington says its renewed attacks are aimed at degrading Iranian capabilities to disrupt maritime traffic in the waterway, with Trump saying last week that \u201cthe US controls the Strait\u201d.<\/p>\n

Iran<\/p>\n

Tehran has pushed back on Trump\u2019s claim.<\/p>\n

Farzanegan said Iran\u2019s \u201cability to influence shipping through the Strait of Hormuz remains a unique source of bargaining power\u201d. \u201cTehran is therefore prepared to bear considerable costs to preserve this leverage.\u201d<\/p>\n

He added that Iran may also calculate that extending part of the economic costs to neighbouring oil-exporting countries will encourage these governments to use their political influence in Washington and push the US towards negotiations.<\/p>\n

\u201cThis appears to be one reason why Iran is prepared to maintain pressure in the Strait despite the considerable costs to its own economy,\u201d the analyst added.<\/p>\n

Aniseh Tabrizi, an associate fellow on the Middle East and North Africa Programme at think tank Chatham House in London, said the significant change since the MoU unravelled \u201cis that there is less optimism than before about diplomacy being feasible\u201d.<\/p>\n

\u201cFor all the sides,\u2029it is difficult to foresee a scenario in which another deal is not only reached, but also implemented successfully,\u201d she told Al Jazeera. \u201cAnd that makes it particularly concerning for all the parties involved.\u201d<\/p>\n

Tabrizi noted that there appears to be \u201cno imminent drive\u201d from the Iranian side to sign a deal. \u201cThey are still maintaining escalatory attacks, but also reciprocating the kind of attacks that are conducted against the country,\u201d she said.<\/p>\n

\"SmokeSmoke rises from an explosion at an unknown location after a US strike on Iran in this screengrab from a video released on July 19, 2026 [Handout\/US Central Command via Reuters]The Gulf<\/p>\n

GCC countries have continued to condemn Iran\u2019s attacks on the regional countries, while calling for diplomacy to dial down the escalation. They have made it clear that Iran\u2019s unilateral control over the Strait of Hormuz would not be acceptable to them.<\/p>\n

Tabrizi added that, like the weeks before the Islamabad MoU, regional countries, especially Qatar, are still batting for talks.<\/p>\n

If anything, Farzanegan said, the economic losses can bring all the sides to the table again for talks.<\/p>\n

\u201cHigher economic losses increase the incentives for negotiations,\u201d he said. \u201cA return to negotiations becomes more likely when both sides conclude that continued escalation cannot improve their bargaining position.\u201d<\/p>\n

Economist Habibi agreed that if an agreement is reached again, \u201cit would be primarily because of the stability of the economic pressures on both sides\u201d. However, he added that the probability of escalation in the next couple of weeks is higher than the probability of negotiation.<\/p>\n","protected":false},"excerpt":{"rendered":"For the ninth consecutive night, the United States mounted attacks on Iran\u2019s defence facilities and maritime capabilities into…\n","protected":false},"author":2,"featured_media":214118,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3],"tags":[148,38,44,647,45,34,49,179,51,57,73],"class_list":["post-214922","post","type-post","status-publish","format-standard","has-post-thumbnail","category-iran","tag-business-and-economy","tag-donald-trump","tag-explainer","tag-features","tag-gcc","tag-iran","tag-middle-east","tag-military","tag-united-states","tag-us-canada","tag-us-israel-war-on-iran"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116952580085265144","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/214922","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=214922"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/214922\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/214118"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=214922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=214922"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=214922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}