The framework for an interim ceasefire between the United States and Iran officially collapsed after the two sides engaged in the fiercest series of air battles in the Persian Gulf region on Thursday. The latest crisis erupted in tandem with President Donald Trump’s harsh statement at the NATO Summit in Türkiye declaring the June peace plan was “over,” thus rekindling panic in global crude futures markets.
The United States military through Central Command (CENTCOM) confirmed that it had launched aggressive air strikes that bombarded around 90 military targets inside Iranian territory. The large-scale operation targeted air defense systems, coastal surveillance assets, and IRGC combat drone storage. The Pentagon stressed that the action was a long-term operation to disable Iran’s sabotage capabilities following attacks on three commercial tankers including Qatari assets earlier this week.
In swift response, Iran’s Islamic Revolutionary Guard Corps (IRGC) launched a wave of missile and drone attacks targeting US military bases in Kuwait and Bahrain. The conflict reportedly spread to the Jordanian airspace, where fighter jets and U.S. Navy air defense systems based there reportedly had to aggressively intercept Iranian ballistic missiles flying towards allied targets.
The diplomatic standoff is rooted in a bitter dispute over the legal status of the Strait of Hormuz, which handles 20% of the world’s petroleum traffic. Iran’s chief negotiator, Mohammad Bagher Ghalibaf, insisted the maritime route would only be opened under Tehran’s laws and security arrangements, not under American bluff. This unilateral regulatory demand was flatly rejected by Washington, which accused Iran of deliberately using the threat of maritime sanctions as a political tool.
Amid the escalating war, economists have warned that a rebound in Brent crude prices to $77.28 a barrel would reignite energy-fueled inflation. This signal puts the new Fed Chairman, Kevin Warsh, in a very aggressive position to activate the sanction of interest rate hikes in the fourth quarter in order to preserve the price stability mandate, as the US labor market has proven to be stable at 215,000 claims.
