US-Iran MoU expires, with both sides digging in on Hormuz control

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 U.S. President Donald Trump said on Monday that Iran should surrender to end a war with the U.S. as talks between the countries remained stalled.

"They should put up the white flag of surrender," Trump told a Fox News reporter during a phone interview.

An interim deal agreed to in June declared an "immediate and permanent termination of military operations on all fronts", but quickly unraveled, with Trump saying it was "over" on July 7 and Iran's foreign ministry declaring it "suspended" a week later.

Under that memorandum of understanding, Iran and the U.S. committed to negotiating a final deal — covering broader issues such as the fate of Iran's nuclear programme — in a maximum of 60 days, extendable by mutual consent. Monday marks 60 days since the MOU was signed.

Separately, Oman and Iran have been in talks to try to reach an agreement to restore commercial shipping in the Strait of Hormuz, which carried 20% of the world’s oil and liquefied natural gas supplies before the U.S.-Israeli attacks on Iran began in late February. "If Oman gets in the way, we'll bomb the shit out of them," Trump told Fox.

A meeting on Monday between Donald Trump's envoy and son-in-law Jared Kushner and Israeli Prime Minister Benjamin Netanyahu was "lengthy, in depth, and very productive," a Board of Peace official said, adding that agreement was reached with Netanyahu on a path forward for the Gaza conflict.

The S&P 500 opened subdued on Monday as markets weighed the prospect of renewed tensions between the U.S. and Iran, while the report of a strong revenue forecast from AI lab Anthropic lifted some tech stocks.

The Dow Jones Industrial Average fell 69.3 points, or 0.13%, at the open to 53663.11. The S&P 500 rose 4.9 points, or 0.06%, at the open to 7790.68​, while the Nasdaq Composite rose 55.5 points, or 0.21%, to 26784.652 at the opening bell.

Iran will escalate tensions in the Strait of Hormuz and wider region if diplomacy with the US fails, a senior Iranian official told Reuters on Monday, pointing to an Iranian policy shift relying on offense rather than defence.

Yemen's Iran-aligned Houthis attacked what they described as a Saudi military ship and four escort vessels in the Red Sea with missiles, according to the group's military spokesperson Yahya Saree on Telegram on Monday.

There was no immediate confirmation from Saudi authorities.

Mocha is a Red Sea port near the Bab al-Mandeb Strait, a strategic chokepoint connecting the Red Sea with the Gulf of Aden and an important international shipping route.

US President Donald Trump has threatened to bomb Oman if it gets in the way of efforts to reopen the Strait of Hormuz.

"If Oman gets in the way, we'll bomb the shit out of them," Trump said in an interview with Fox News on Monday.

In this second term of the Trump administration, personal ties, backhanders, and flattery have all but replaced formal diplomacy in the Middle East.

The son of Steve Witkoff, US Special Envoy to the Middle East, reportedly leveraged his connections to secure billions of dollars in investments from the Gulf.

Overseas investors, including from Saudi Arabia, account for 99 percent of the $6.16 billion dollars managed by Affinity Partners, the investment fund founded and led by Jared Kushner, Trump’s son-in-law and informal advisor, who also participated in delicate regional negotiations over Gaza.

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The UN rights chief voiced alarm Monday at the rising civilian toll of escalating hostilities in Yemen, urging restraint and an immediate de-escalation to avoid plunging the country back into a full-scale war.

"I urge all parties to halt immediately any actions that risk returning Yemen to full-scale conflict," Volker Turk said in a statement, as renewed fighting between the Houthi rebels and the government undermined a 2022 truce.

At least five Palestinians were killed and 18 injured by Israeli attacks across the Gaza Strip over the weekend.

Israel has killed at least 1,265 people and injured 4,198 in Gaza since the US-brokered "ceasefire" came into effect last October, Gaza's health ministry said in a statement on Telegram.

Israel's genocidal war on Gaza began on October 2023, Israel has killed at least 73,399 people and injured 174,310 in Gaza.

US President Donald Trump reiterated on Monday that Iran cannot have a nuclear weapon amid a lack of progress ‌in diplomatic efforts to resolve the Middle East conflict.

"The number one Goal is, and always will be, that Iran cannot have, in any way, shape, or form, a Nuclear Weapon," Trump said in a post on Truth Social. 

Iranian Foreign Ministry spokesperson Ismail Baghaei denied reports about a secret meeting between Iran and the United States in the city of Erbil, describing those allegations as "completely fabricated."

In his press conference, the spokesperson said that this news is part of a series of "media outbursts and psychological operations" aimed at provoking disagreements and dispersing positions among the pillars of decision-making in his country.

The Iranian Foreign Ministry spokesman also stressed that the United States, after finding itself "stuck in the quagmire they created with their own hands," is constantly changing the goals of the war, in an attempt that he said aims to "justify their successive failures before world public opinion."

The Iranian official stressed that the best path for the US administration is to acknowledge the existence of a strategic "miscalculation" and quickly exit this situation.

Iran said on Monday that two French embassy employees involved in a diplomatic dispute last month would not be allowed to return to Iran.

Foreign Ministry spokesman Esmaeil Baghaei said the two had violated the Vienna Convention—which defines the rules and privileges of diplomatic missions—engaging in activities supporting Iranian civil society.

"Insisting that these individuals were engaged in activities related to supporting civil society is itself an admission that the Vienna Convention was violated," Baghaei told a weekly press conference, without elaborating. Tehran has long been highly sensitive to what it sees as Western meddling in its internal affairs, especially since the US and Israel launched attacks on Iran in late February.

France summoned Iran's charge d'affaires on 21 July after accusing Iranian security forces of detaining and physically intimidating its embassy staff in Tehran. 

Jared Kushner has begun meeting with Prime Minister Benjamin Netanyahu in occupied Jerusalem, according to Israeli medi.

Kushner is joined at Netanyahu’s office by Board of Peace senior envoys Nickolay Mladenov and Tony Blair.

The meeting comes as the US-backed Board works to advance the 15-point road map to move forward with Trump’s peace plan for Gaza, which Hamas agreed to, but Netanyahu and other Israeli officials have publicly rejected.

Iraq's plans to export oil via a pipeline through Syria to avert future disruptions in the Strait of Hormuz will likely require four years of construction and cost at least $15 billion, sources with knowledge of the project told Reuters.

US officials and energy executives are billing the plan, which is receiving initial support for feasibility studies from a consortium including Chevron, as part of a strategy to reduce the industry's reliance on a waterway that has been largely shut by the Iran war.

"Over the next two years, the strait is going to become irrelevant. It is going to become just another body of water," US Treasury Secretary Scott Bessent said last week.

While a fifth of the world's oil and liquefied natural gas was shipped through Hormuz before the conflict, Bessent said "more than 50% or 70%" of those exports would instead be exported via underground pipelines.

But two sources directly involved in the project told Reuters the plans for the Iraq-Syria pipeline would take twice that long due to the need for new infrastructure and could face other hurdles.

Both sources asked not to be named due to the sensitivity of the matter.

Iran's foreign ministry said on Monday it will consider three missing pilots to be prisoners in Qatar, despite Doha's denials, until it clarifies their fate.

Tehran has said the Iranians went missing while carrying out an operation against the United States' Al Udeid Air Base in Qatar on 2 March, shortly after the outbreak of the US-Israeli war on Iran.

On Saturday, Iranian authorities alleged for the first time that the pilots had been captured in Qatar, after previously saying one pilot had been killed and three others were missing following their sortie.

"It is imperative to obtain clarification on their situation," foreign ministry spokesman Esmaeil Baqaei told a weekly press briefing.

"Until the pilots' situation is clarified, we consider them prisoners and will spare no effort to shed light on their fate."

Qatar denies holding the pilots and said an invitation had been sent to Iran "to be briefed on the details of the search and rescue operations in April, but the Iranian side has yet to respond".

Iranian Foreign Ministry spokesman Esmail Baghaei said the 60-day deadline following the 18 June memorandum between Tehran and Washington was moot since the US had violated the agreement.

"There is no provision in the memorandum of understanding referring to a '60-day deadline', and the Islamic Republic of Iran never formulates its policies under pressure, ultimatums or time limits," he said. "Due to the gross and widespread violation of the 18 June memorandum by the United States just a few weeks after it was signed, no talks were initiated."

Iran's Foreign Ministry spokesperson said that talks with Oman are continuing. 

He noted that they talks "are long due to complexity of subject, multiple actors involved, and countries seeking to undermine process."

Pakistani Prime Minister Shehbaz Sharif thanked US President Donald Trump for his support regarding the joint defence agreement reached between Palistan, Saudi Arabia and Turkey.

Sharif said the three countries would play a "constructive role" in ensuring the defence of their own countries and the wider region, while praising Trump's "courageous and decisive leadership".

Iran's military announced on Sunday that it was offering a bounty equivalent to $30,000 for killing or capturing US soldiers, with the reward doubled if carried out by a woman.

Army chief Amir Hatami said the plan had been drawn up following a "large number of requests" to participate, according to the IRNA state news agency.

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Israeli Prime Minister Benjamin Netanyahu is due to meet Donald Trump's envoy and son-in-law Jared Kushner on Monday, a day after he held a rare meeting with Hamas officials in Cairo, in a bid to push forward the US president's Gaza peace plan.

A diplomatic source said Hamas leader Khalil Al-Hayya was present at some of the meetings that mediators held with Kushner and Trump's Board of Peace envoy for Gaza, Nickolay Mladenov, in Cairo on Sunday.

It marks Kushner’s second known meeting with representatives of Hamas, the Palestinian militant group designated a "terrorist movement" by the United States.

Kushner previously met Hamas officials alongside U.S. envoy Steve Witkoff in October 2025, helping clinch a deal that led to an alleged, seemingly one-way ceasefire in Gaza at the time.

Shipping through the Strait of Hormuz slowed over the weekend, with no ships transiting the waterway on Sunday, Reuters reports, citing ship tracking data from Kpler.

Five commodity vessels transited the waterway on Saturday, and none were recorded sailing through on Sunday, marking a significant drop compared with the previous weekend when 31 vessels transited the waterway, the data showed.

The drop in numbers this weekend came as the UAE said three vessels operated by the Abu Dhabi National Oil Company were attacked in transit last week.