Six weeks ago, the United States and Iran signed a ceasefire agreement—described by both parties as a memorandum of understanding—intended to lay the groundwork for nuclear negotiations. After three weeks without progress, that arrangement collapsed. Now, the two sides find themselves back at the negotiating table attempting to forge a new ceasefire that would once again open the door to nuclear talks.

Markets have responded to the latest headlines with measured optimism. Oil prices and bond yields have declined, while US equities have edged higher. The market sensitivity reflects the Strait of Hormuz's outsized role in global energy supply—roughly one-fifth of the world's daily oil consumption routinely passes through the waterway, making any disruption a direct input to crude pricing and inflation expectations. The central question, however, is whether these developments represent genuine progress or yet another false start.

Trump Promotes Strait of Hormuz Deal

President Trump signaled progress on two fronts, stating: "There's a deal on Hormuz and there will be a deal on denuclearisation." He added that nuclear talks with Iran would commence "tomorrow afternoon."

According to the Associated Press, Trump's proposal for "reopening" the Strait of Hormuz would be paired with the United States lifting its naval blockade on Iran. The scenario closely mirrors the position both sides found themselves in two months ago, with the same core issues and required compromises resurfacing.

The AP source noted that no formal agreement has been reached, though mediation efforts remain ongoing.

Strait of Hormuz Activity Remains Subdued

Any "reopening" of the strait is unlikely to restore traffic to pre-war levels. Shiptracking data indicates some improvement in activity, but overall volumes remain well below historical norms. On 29 July, LNG carrier transits resumed following a two-week pause. Over the past several days, however, the number of vessels transiting the strait has averaged just 10–15 per day—a fraction of the 70-plus daily transits typical in peacetime. For LNG markets, the strait is equally critical, carrying nearly all of Qatar's exports, which account for roughly 20% of global liquefied natural gas supply.

If a deal is reached, negotiations are expected to follow the same framework as before. In the initial round, discussions stalled at Stage 4/5, and a similar trajectory is anticipated should the current process unfold along the same lines.

Nuclear Talks Face Persistent Obstacles

Even with a ceasefire and the resumption of dialogue, an end to the broader conflict is far from guaranteed. Both sides maintain entrenched red lines on nuclear and uranium-related issues. Iran has previously outlined that nuclear talks must encompass enrichment, stockpile limits, and its civilian nuclear needs (ForexLive). These are questions on which the two nations have failed to find common ground for over a decade, dating back to the negotiations that produced the 2015 Joint Comprehensive Plan of Action, which the US withdrew from in 2018 under the first Trump administration.

The United States operates on the assumption that sufficient pressure can compel Iran to concede. The past five months have demonstrated otherwise, and the prospect of a comprehensive nuclear agreement remains remote.

Iran's strategy, as observed throughout this period, has been to prolong negotiations through incremental and non-committal promises, seeking further sanctions relief and the unfreezing of assets in return. The unresolved question is whether Trump will accept such an outcome or whether hostilities could resume after an extended diplomatic interlude.

Iran's primary leverage remains its control over the Strait of Hormuz. As long as that strategic advantage holds, Tehran has little incentive to alter its approach, and the cyclical pattern of ceasefire, stalemate, and renegotiation is likely to persist. For observers tracking what comes next, the indicators to watch are concrete: daily vessel transit counts through the strait, any formalization of a written ceasefire terms document, and whether Stage 4/5 negotiation hurdles are substantively addressed rather than deferred once again.