A veiled pro-government supporter holds an Iranian national flag next to a portrait of Iran's late Supreme Leader Ayatollah Ali Khamenei on the eve of his funeral in Tehran, Iran, on 2 July 2026. www.reutersconnect.com. Photo by Morteza Nikoubazl/NurPhoto

Despite a landmark agreement between the US and Iran, the region remains on a knife edge, with the diplomatic window closing fast amid fresh points of dispute, defiant rhetoric and escalating military action.

When Iran and the US opened peace talks in April, hopes soared. A deal could ease the war’s considerable global economic impact, reopen the Strait of Hormuz and restore normality. The landmark 14-point Memorandum of Understanding (MoU) mediated by Pakistan and signed electronically in mid-June included a commitment by Iran to using its ‘best efforts’ to forgo weaponisation and manage enriched uranium in return for full normalisation and sanctions relief. But five weeks later, expectations of peace were shattered by fierce Israeli opposition and growing rifts over both Lebanon and the future of the Strait.

The wrecking ball

The first wrecking ball against the agreement came from Israel, wielding even more influence over the US than usual. Israeli officials, including Prime Minister Benjamin Netanyahu, signalled they may not be bound by the agreement and warned of negative repercussions in a region already riven with rivalries and armed conflict. Israel views a nuclear-armed Iran as a threat to its own survival. It also accuses Iran of using agreements to protect its proxy militias, pursue nuclear weapons in violation of global frameworks and permanently alter the regional balance of power.

The war began in February when the US and Israel struck Iranian nuclear and military facilities, decapitating their top leadership. Iran retaliated by closing the Strait and striking US and Israeli bases across the region. The conflict quickly ensnared several regional countries, including Lebanon. While the new MoU included provisional frameworks to halt regional hostilities, Netanyahu openly shrugged off such parameters and doubled down. Israeli troops immediately pushed deeper into Lebanon with continued strikes on the Iran-backed Hezbollah.

Defying Washington, National Security Minister Itamar Ben Gvir launched a blistering assault on the MoU, declaring that Israel needs to burn all of Lebanon, not just the south, where Hezbollah is concentrated. ‘All of Lebanon must burn. For every tear of an Israeli mother, a thousand Lebanese mothers must weep,’ Ben-Gvir posted on social media. ‘Enough with the ping-pong. In the Middle East, you don’t win with measured responses — you need to go berserk.’

Such defiance has reinforced Tehran’s insistence on an all-encompassing deal and not letting go with its bargaining chips such as proxy groups. Tehran used the Israeli position to assert that security in the Strait of Hormuz cannot be guaranteed if Israeli operations continue to systematically dismantle Lebanon and raze villages in the south.

Sara Segneri, Vice-Chair of the IBA War Crimes Committee, told Global Insight that warring parties were, at all times, bound by international law, even during talks. ‘The parties, including Israel, should negotiate in good faith,’ she says, ‘refraining from escalatory attacks while negotiators are headed to or at the table making progress towards peace. That is not simply a political preference. It reflects the UN Charter framework requiring disputes likely to endanger international peace and security to be addressed through negotiation, mediation, conciliation, judicial settlement or other peaceful means.’

After Israel’s military escalation caused mass civilian deaths in Lebanon and targeted journalists, many international organisations issued calls for restraint and respect for international law obligations. According to the Lebanese Health Ministry, Israeli strikes have so far claimed the lives of 4,300 people in Lebanon, while at least 32 Israeli soldiers and four civilians have been killed in the hostilities.

The IBA’s Human Rights Institute (IBAHRI) has condemned Israel’s large-scale strikes on Lebanon, calling for accountability and independent investigations into Israel’s violations of international humanitarian law. ‘It is critical to emphasise that ceasefire discussions or political agreements do not provide legal justification for prior or ongoing uses of force that fall outside the scope of international law,’ says IBAHRI Co-Chair Mark Stephens CBE. ‘The reported strikes in Lebanon raise serious questions under Article 51 of the UN Charter and appear inconsistent with the strict requirements governing self-defence. These attacks reportedly occurred without warning, in potential violation of obligations to protect civilians under Article 57(2)(c) of Additional Protocol I to the Geneva Conventions.’

Segneri backed the IBAHRI position, saying the wider international community and organisations have duties under international law just like the warring parties themselves have a duty to help bring about peace. In practice, states, including those who are party to the Arms Trade Treaty, must ensure that their own assistance, arms transfers, use of airspace or territory, intelligence-sharing or political support do not facilitate serious violations. ‘Under the obligation to respect and ensure respect for humanitarian law, states with influence over the parties must use it now to press for an immediate cessation of hostilities, protection of civilians and a credible diplomatic framework that includes Lebanon rather than leaving it in legal and political limbo,’ she says.

The civilian price

As the conflict continues to balance on the brink, the humanitarian crisis deteriorates daily. While Israel signed a deal with Lebanon’s anti-Hezbollah government to help disarm the faction, on 6 July, an Israeli strike killed four people, including a school principal. Israeli forces have also broadened evacuation orders to include several communities near the ancient coastal city of Tyre, triggering yet another wave of civilian displacement. Residents of the southern Lebanon villages of Ghassaniyeh, Houmine al-Faouqa and Nsariyeh were given urgent instructions to vacate their homes and move at least one kilometre away from designated danger zones, according to local reports. The expanding exclusion area is now inching closer to the densely populated outskirts of Tyre, straining Lebanon’s already fragile humanitarian landscape.

‘Families in Tyre have already been forced to flee multiple times, depleted their savings and sold whatever possessions they had left to survive,’ says Josephine Haddad, Policy, Advocacy and Communications Coordinator for the The International Rescue Committee (IRC), the relief agency founded in 1933 to aid Nazi-era refugees at the request of Albert Einstein.

Segneri says that the humanitarian situation in Lebanon is exactly why an overarching agreement across the region would be a better alternative to a limited deal that excludes Lebanon. ‘Separating Lebanon from the broader negotiations may be politically convenient, but it is legally and strategically dangerous,’ she says. ‘It leaves the civilian population exposed to recurring hostilities and undermines the very framework intended to prevent another Lebanon-Israel war. The urgent task is therefore a comprehensive ceasefire and civilian-protection arrangement that addresses Lebanon, Gaza, Iran and the regional countries that have been subjected to attacks, rather than treating each theatre as expendable or separable.’

The deal has suffered another unexpected complication. The US and Iran now have expanded their war aims from fighting over the future of the Iranian people, an initial reason for the US-Israel attacks, to now fighting over royalties that may go to whoever is running the Strait of Hormuz.

President Trump announced on 13 July that the US would implement a mandatory transit fee for all commercial vessels passing through the Strait, effectively establishing a toll system for the vital maritime route. By framing this as a cost-recovery measure for naval security operations, the administration would have charged cargo operators a 20 per cent surcharge. This policy would have effectively imposed a new financial barrier on the world’s most critical oil transit point and specifically isolated Iranian maritime traffic from international access. ‘We guarded it for nothing, and now we’re going to guard it,’ Trump told Fox News. ‘We're going to get paid for guarding it, a lot of money.’

In response, Iranian officials immediately countered in kind. Iranian Foreign Minister Seyed Abbas Araghchi publicly agreed that the entities actually guaranteeing safety in the strait deserve compensation saying that those entities are actually Iranian, not American. ‘Iran has always been the GUARDIAN of the Strait and will remain so FOREVER. 20 per cent is of course too much. We will be fair,’ he said on social media.

President Trump revised this plan on 14 July in favour of striking investment deals with America’s Gulf allies, to whom the country would implicitly allow safe passage through the Strait in return.

Tehran’s unexpected leverage

Such an assertive and dismissive tone would have been hard to imagine prior to the war. Paradoxically, US and Israeli military attacks on Iran have strengthened Tehran’s hand. By absorbing the loss of top-tier leadership and surviving the systematic destruction of key military assets without collapsing, Iran has so far projected a level of strategic durability that has caught its regional adversaries off guard. The country rapidly adapted its asymmetric tactics and continued to project power through proxies and new missile technology. The regime now operates with an emboldened sense of power, using its proven capacity for defiance; in particular, it is challenging previous maritime arrangements across the Strait and even, on occasion, threatening to close another important maritime passageway, Bab el-Mandeb.

Ultimately, while the US and Iran initially navigated promising negotiations, Israel’s powerful opposition, military operations in Lebanon and grandstanding from all sides have rendered the accord a short-lived episode. The world remains hostage to a shifting list of goals and objectives that seem to expand by the day. And, despite the MoU, the economic and humanitarian costs continue to mount as the conflict stubbornly refuses to end.

Emad Mekay is a freelance journalist and can be contacted at emad.mekay@int-bar.org