US and Iran trade 3rd day of strikes as Hormuz truce frays

The US and Iran traded a third day of strikes around the Strait of Hormuz, testing a fragile ceasefire and threatening global oil flows through the waterway.

The US struck Iranian communication, air-defense and drone-storage sites Saturday after Iran hit a tanker carrying 2 million barrels of crude, the third day of tit-for-tat exchanges that risk unraveling last week's memorandum of understanding.

"The Iranians are leaning forward to exercise control over the strait, then leaning back when the Trump administration objects vigorously enough because they want to keep getting the windfall from this MOU," Jake Sullivan, former national security adviser under President Joe Biden, told CNN's Fareed Zakaria.

The US military said it targeted Iranian communication sites, air-defense systems, drone-storage facilities and minelaying capabilities around the strait. Iran's Islamic Revolutionary Guard Corps responded by striking US bases in Kuwait and Bahrain, where air-raid sirens sounded. Kuwait said it intercepted two ballistic missiles. The Joint Maritime Information Center, overseen by the US Navy, raised the maritime security threat level in the strait to "substantial."

The exchanges show the fragility of the 14-point framework signed June 20, which declared an end to hostilities but left critical ambiguities — including whether Iran can charge fees for vessels transiting the waterway that handles about 20% of the world's crude oil. With both sides agreeing to meet in Qatar on Tuesday and "stand down for now," according to a Trump administration official, the question is whether the ceasefire can survive the competing interpretations of its terms.

The violence began Thursday when Iran struck the Singapore-flagged container ship Ever Lovely near the Omani coast, which President Donald Trump called "a foolish violation of our Ceasefire Agreement." The US responded Friday with strikes on Iranian missile and drone storage locations and coastal radar sites. On Saturday, an Iranian drone hit the Panama-flagged tanker Kiku, carrying 2 million barrels of crude, damaging the vessel's bridge. All crew members were uninjured, the UK Maritime Trade Operations said.

Trump suggested he was losing patience. "There may come a point when we are no longer able to be reasonable, and will be forced to militarily complete the job," he wrote on Truth Social. "If that happens, the Islamic Republic of Iran will no longer exist." Vice President JD Vance, who helped lead negotiations, posted that "violence will be met with violence."

Traffic slows as risk premium returns

The attacks have already disrupted the tentative recovery in shipping through the strait. Tanker traffic reached 13 transits on Friday, down from 24 on Thursday and 27 on Wednesday — the highest since the conflict began with US-Israeli strikes on Iran on Feb. 28, according to Kpler. Overall sailings, including dry bulk ships, hit 62 on June 24, representing 53% of traffic on the same day last year, AXSMarine data showed. Before the conflict, average daily sailings were around 125 ships.

Crude prices dropped more than 3% on Friday on easing supply concerns as top exporter Saudi Arabia resumed loadings in the Gulf. But the renewed hostilities threaten to reverse those gains. US gasoline prices averaged $3.87 a gallon Sunday, according to AAA, down from a peak of $4.56 in late May but still 30% above pre-war levels.

What's at stake in the strait

The core dispute centers on control of the waterway. The memorandum of understanding states Iran "will make arrangements using its best efforts for the safe passage of commercial vessels" — language Tehran has interpreted as giving it authority to manage traffic. The US insists the strait remain toll-free. Iran's Assembly of Experts, which elects the supreme leader, told negotiators Saturday that the strait should be closed if Israel does not stop operations in Lebanon, adding that Iran's nuclear rights were off limits in the talks.

The last time the US and Iran engaged in sustained tit-for-tat strikes around the strait — during the 2019 tanker attacks after Trump's first-term withdrawal from the nuclear deal — crude prices spiked about 15% over two months while shipping insurance premiums quintupled. The current escalation carries similar risks for global energy markets.

The US and Iran have agreed to meet Tuesday in Qatar, a Trump administration official said, with both sides agreeing to "stand down for now." Whether that pause holds will determine if the fragile ceasefire can survive its first real test — or if the region slides back into the full-scale war that the memorandum was designed to end.

This article is for informational purposes only and does not constitute investment advice.