In mid-July, the United States resumed strikes on Iranian territory, sustaining them night after night. Iran has answered with missile and drone attacks on the Gulf states hosting American forces. Commercial transit through the Strait of Hormuz has effectively ground to a halt, and war-risk insurance premiums have climbed to as much as 10% of a vessel's value. All of this has unfolded barely a month after a memorandum of understanding (MoU) was signed in Islamabad on June 17. Yet, military moves alone do not explain the trajectory. None of the signatory capitals can muster the political will to defend the text to its own public.

The Islamabad MoU is a 14-point interim framework that halted the war. It provides for a 60-day negotiation timetable, the lifting of the blockade, free transit through the Strait of Hormuz, a large reconstruction fund, and the downblending of uranium stockpiles. Yet it did not resolve the parties' most critical disputes. It postponed them.

Mutual accusations of violations surfaced within the first week. In late June, Iranian missiles struck bases in Kuwait and Bahrain. In early July, commercial tankers were hit in the Gulf, and the U.S. hit back with strikes on more than 80 targets. U.S. President Donald Trump declared that war with Iran was about to resume on July 7. Tehran suspended its obligations on July 13. Even so, the two sides have not entirely severed the technical contacts running through Qatari and Pakistani mediation.

Strategies, aims at battlefield

Target selection on the ground points to a systematic purpose beyond punishment. The U.S. first destroyed the coastal radar, anti-ship missile and fast-attack-craft infrastructure, then turned to the bridges and rail lines connecting Bandar Abbas to the interior. A naval blockade and an attempt to impose transit fees on the strait have accompanied the strikes. The real contest, then, is not whether the strait stays open but who sets the rules of passage.

Iran's response follows a similar logic. Tehran has targeted American radar and logistics infrastructure across the region, making the host countries feel the war's cost. Because neither side can sell a step back at home, the escalation feeds itself.

Signals about the next threshold can also be read from the field. Trump has said he is saving energy infrastructure for last but will ultimately strike it. Options reportedly under discussion in Washington include seizing Iranian islands near the strait and hitting the underground nuclear complex near Natanz. That nuclear facilities have gone untouched in the current wave suggests, for now, a pressure instrument held in reserve rather than active preparation. Yet reports that dozens of additional aerial refueling aircraft are moving to the region, Israel among the destinations, suggest the groundwork for an operation reaching deep into the country.

The balance of capacity matters, too. Iran's ballistic missile stockpile, counted in the thousands before the war, is assessed to be seriously depleted, its launchers and production base substantially destroyed. Tehran is working to accelerate production, but the gap between expenditure and replacement is widening. Iran cannot sustain this tempo indefinitely. At the same time, a closed Hormuz imposes costs on everyone through global energy markets, a sign that Washington does not have unlimited time either.

Conflicting groups in Iran

Understanding Tehran requires looking at the leadership transition as much as the war. Supreme Leader Mojtaba Khamenei has not appeared in public since his father's death, making his will known through written messages. In endorsing the MoU, he noted that he thought differently but gave his permission, a position that shields him from responsibility for the outcome. In early July, he defined revenge as the will of the nation. In mid-July, he dismissed Trump's signature as worthless. When the office that authorized diplomacy erodes that channel's legitimacy, the negotiating team is left defenseless.

That team is operating in a shrinking space. Parliament Speaker Mohammad Bagher Ghalibaf has defended the process while keeping the door ajar, saying there is no point in staying bound to a text from which Iran does not benefit. President Masoud Pezeshkian faced slogans denouncing compromise at the funeral ceremonies, where Foreign Minister Abbas Araghchi was physically assaulted. What keeps them at the table is, above all, the economy. Official warnings that basic goods will run short if sanctions and the blockade persist have turned negotiation from a preference into a necessity. Indeed, the technical contacts in Doha in early July took up a channel for handling violations and a partial release of frozen assets.

At the center of the opposing camp stand the Paydari front and the wing gathered around fundamentalist Saeed Jalili. This bloc has cast the MoU as capitulation from the outset, insisting Washington never intended to implement it. Lawmaker Mahmoud Nabavian leaked the text to the press before it was signed, accused the negotiators of overstepping the Supreme Leader's lines and openly asked whether a coup was underway. The loss of his seat on parliament's National Security Commission in mid-July is read as a sign of the leadership's resolve to contain this wing. The hardline press campaign against the negotiators, the harsh statements from Assembly of Experts members and the parliamentary bill asserting full sovereignty over Hormuz are instruments of the same campaign. The funerals in early July likewise became its show of strength, with slogans of vengeance rising from crowds of millions.

This is not merely a choice between war and diplomacy. Beneath it runs a struggle over who will hold sway in the post-Khamenei order. The hardline wing, lacking access to the new Supreme Leader, is uneasy that decision-making has concentrated in the visible troika of Ghalibaf, Pezeshkian and Araghchi. As the conservative mainstream drifts toward the negotiators, the fear of marginalization in these circles deepens. The coup rhetoric is less a statement of fact than an expression of that fear. There is a paradox here as well. Every American strike on the Islamic Revolutionary Guard Corps (IRGC)' s naval assets weakens the hardliners' instruments, yet the same strikes confirm their thesis that the MoU cannot be trusted.

Domestic pressure in US, Israel

The domestic politics feeding escalation is not unique to Tehran. In Washington, the officials leading the negotiations favor keeping the talks alive, while the security establishment argues for more pressure. The war powers debate in Congress continues, and both chambers have passed resolutions calling for the withdrawal of forces. Polls show support for the war down to around a third, and the questioning comes not only from the opposition but from the media circles that carried Trump to power.

This widening dissent pushes the administration into a narrative that places responsibility on Tehran. The death of two American soldiers in a missile strike on a base in Jordan, the first such losses since March, has moved the debate into a new phase. It strengthens both the pressure for a hard response and the hand of those questioning the war's cost. The White House, even amid the losses, has kept stressing that the door to negotiation remains open.

In Israel, the calendar is decisive. With parliament dissolved, the country heads to elections in late October, and the opposition presents the MoU as a failure that did not durably curb Iran's nuclear and missile capabilities. Prime Minister Benjamin Netanyahu has said the war is not over and signaled readiness for a new wave of strikes.

Washington, for its part, has run the current campaign without involving Israel, though the refueling aircraft now heading its way suggest that distance may not last. Arab capitals are reported to be pressing Washington ever more openly for regional de-escalation. The hardening rhetoric of a government under electoral pressure forms the escalation's third layer.

The MoU did not solve the underlying problems. It froze them. Combined with domestic balances that punish compromise and reward intransigence, those frozen problems have flared up again.

Four indicators are worth watching. The first is whether the strikes cross the threshold of energy and nuclear infrastructure. The second is whether the coastal campaign heralds an amphibious operation. The severed bridges around Bandar Abbas, the layered dismantling of coastal defenses and the landing forces moved into the region largely match what an operation against the strait's islands would require. Whether that preparation has hardened into a decision will show in final-phase steps, such as minesweepers moving toward the strait. The third is whether the mediation channel functions again. The fourth is whether Tehran's suspension, which for now stops short of formal withdrawal, becomes permanent. The real question is not whether the MoU can be saved. It is whether an agreement that now costs more to defend than to break can still stand in any of the three capitals.