After three months of war that shut down one of the world's most critical shipping lanes, the US and Iran have a deal, on paper at least.
The two countries signed a 14-point memorandum of understanding last week, declaring an immediate end to military operations and committing to reopen the Strait of Hormuz, the channel that carries roughly a fifth of the world's traded oil and gas. Under the terms, the US will lift its naval blockade in phases over 30 days, while Iran clears mines and restores shipping traffic to pre-war levels. The two sides now have 60 days to negotiate the harder issues including: sanctions relief, the release of frozen Iranian assets, and what happens to Iran's stockpile of enriched uranium.
That timeline barely survived its first formal meeting. JD Vance travelled to Switzerland this week for the first talks under the new agreement, only for Trump to threaten to "hit Iran very hard again" over ongoing fighting in Lebanon, a country that isn't even a party to the deal. The Iranian delegation walked out shortly after. Iran had already announced it was re-closing the Strait of Hormuz days earlier, citing the US's failure to secure a ceasefire in Lebanon, and shipping data backed that up: only a single oil tanker crossed the strait with its tracker on, compared to dozens per day before the announcement.
The markets had started pricing in peace, which could be premature. Brent crude had fallen sharply since the deal was first announced, easing pressure on global inflation and giving central banks (including the RBA) more room to move on interest rates. Gold had pulled back from its wartime highs as fears of a wider conflict faded. Australian households had even started feeling it at the petrol pump, with fuel prices dropping as much as 90 cents a litre from their peak.
All of that now sits on shakier ground. Lebanon was always the loose thread in this deal, since neither Israel nor Hezbollah signed it, and this week showed how quickly that thread can unravel the rest. Iran says nuclear talks can't even begin until Lebanon settles down and it sees the economic benefits it was promised. Trump's threats suggest Washington's patience for that condition is thin. The 60-day clock is still running. Whether anyone gets back to the table before it runs out is anyone's guess.