A cargo vessel took a direct hit in the Strait of Hormuz on Tuesday, sustaining engine room damage and a crew casualty as the 60-day ceasefire between Washington and Tehran expired without extension. The U.K. Maritime Trade Operations agency confirmed the attack, with the Omani Coast Guard assisting the remaining crew.
The incident came hours after Iranian military spokesperson Ebrahim Zolfaghari threatened that vessels attempting passage through the strait would "find several beautiful holes in their hulls," according to Fox News. President Donald Trump ruled out extending the ceasefire on Monday, saying Tehran won't accept the terms necessary to end the conflict. "They're not going to make the kind of deal that I feel is necessary," Trump said in the Oval Office.
Standoff Hardens as Talks Collapse
The ceasefire, reached in mid-June to create space for diplomatic engagement, expired Monday with no formal follow-on agreement. Eurasia Group analysts noted that "both sides will dig in for a longer standoff," with neither seeing an urgent need for concessions. Iran's hardline leadership has no intention of winding down the conflict, instead seeking to widen the war to raise costs for the U.S. and its regional allies, the Wall Street Journal reported Sunday, citing intelligence from unnamed Iranian and Arab officials.
Eurasia Group no longer expects a peace deal by September and has pushed back its timeline for de-escalation to year-end. The most likely outcome is "a limited deal" that would allow Hormuz traffic to partially recover, the risk consultancy said. Pressure on Washington to push for an imminent reopening of the strait has eased as success in routing oil around the waterway has kept prices from spiking past $100 a barrel.
Economic Adaptation Buys Time
The global economy has adapted to the closure, giving the U.S. room to "afford to wait," Eurasia Group said. The Strait of Hormuz handled about a fifth of the world's crude oil and gas before the war that started in late February and has become the central flashpoint between the U.S. and Iran. Shipping remains near a standstill amid sporadic attacks on oil tankers. Just three vessels transited the strait on Sunday, according to shiptracking data from Kpler.
The Bab el-Mandeb strait, where Yemen Houthis declared a naval blockade on Saudi Arabia in mid-July, saw just 49 weekend transits by commodity vessels, according to Reuters, down from 55 in the prior week. Iranian Foreign Minister Abbas Araghchi said in a Telegram post Saturday that Iran's negotiations with Oman remained ongoing to determine a new maritime route in the strait.
Trump Threatens Oman Over Route Negotiations
Trump threatened to bomb Oman on Monday if the Gulf state "gets in the way" of U.S. efforts to reopen the strait. "If Oman gets in the way, we'll bomb the s--- out of them," Trump told Fox News in an Aug. 17 phone interview, according to Trey Yingst, Fox News' chief foreign correspondent. Trump later said in an Oval Office event on Aug. 17, "I don't think they've behaved very well, but we'd handle them very easily, just like we do other things."
Trump also told Fox News that "Iran should wave the white flag of surrender." He said, "I have no time schedule" and "I'm not in a hurry," even as the political fallout of the war collides with the November midterm elections. With dimming prospects for a U.S.-Iran deal to quickly emerge, Trump has repeatedly accused Iranian leaders of lying to him by saying one thing in private negotiations and the opposite in public.
The two sides dispute who controls the strait, which about 20% of the world's crude oil and liquefied gas pass through as a critical access point for Middle East oil exports. Since the memorandum of understanding unraveled, Iran has resumed attacks on ships in the strait that Iranian leaders say lack permission to access the channel. Through the U.S. naval blockade, Trump claims the United States has opened the strait to all commercial ships other than those from Iran, crippling Iran's economy because it relies on oil exports. Iran has rejected Trump's characterization, saying the waterway is under the "complete management and control" of Iran and that no commercial ships can go through without its permission.
South Korea Alliance Strained Over Iran War
President Trump on Sunday ordered the U.S. military to downsize the 11-day Ulchi Freedom Shield exercises with South Korea, which began Monday as scheduled. It wasn't known which parts of the training were being scaled back. Trump criticized South Korea for not joining the U.S. war in Iran. The move baffled many in South Korea, which has been closely allied with the U.S. for decades and where national security is a top priority because of threats from nuclear-armed North Korea.
Dan Fried, an assistant secretary of state for European affairs in the George W. Bush administration, said, "There is no American interest that I can see in this." He added, "On all levels it makes no sense. It undermines the South Koreans, undermines the Japanese, frightens the Taiwanese, unnerves NATO and emboldens the Chinese, not to mention the North Koreans."
Danny Russel, former assistant secretary of state for East Asia and the Pacific in the Obama administration, said Trump's decision to side with North Korea, which strongly objects to the annual joint military exercises, is "firmly in the 'hard-to see-how-it-could-be-worse' category." He said, "It is tragically upside-down. Trump is punishing an ally while encouraging an adversary. He is protecting Kim Jong Un's sensitive feelings from an unfriendly signal at the expense of U.S.-South Korean security."
Rep. Greg Meeks of New York, the top Democrat on the House Foreign Affairs Committee, said in a statement, "Treating one of America's closest allies like an adversary weakens our alliances and benefits China and North Korea." Trump on Monday doubled down, posting a photo of North Korea's leader speaking on a phone with the caption, "HEY DONALD ... WE COOL, RIGHT?"
Retired U.S. Ambassador Robert Wood, who served under Republican and Democratic presidents, said the joint military exercises are critical to deterring North Korea, which has shunned any talks with the U.S. over its nuclear program and has accelerated weapons testing. "We also don't want South Korea to draw the conclusion that a nuclear weapons capability is the only guarantee it has to ensure its security," Wood said.
Matthew Kroenig, who previously served in defense and intelligence positions in Republican and Democratic administrations and is now with the Atlantic Council, said polls show South Koreans have increasingly supported the idea of pursuing their own nuclear weapons. "The United States has been working really hard to try to persuade South Korea that they are protected," he said. Scaling back the exercises "potentially undermines that message," he said.
Trump's turnabout came even after South Koreans worked to flatter him, eager to gain favor on trade and defense. As soon as he sat down in the gilded Oval Office for his meeting with Trump last year, new President Lee Jae Myung praised the room's elaborate decor. Lee affirmed Trump's assertion that Kim would not have pursued his nuclear ambitions had Trump won a second consecutive term in 2020, while dangling the prospect of an eventual Trump Tower in North Korea. Trump just hours earlier had appeared to show sympathy for Lee's predecessor, Yoon Suk Yeol, who had been ousted from office after imposing martial law in December 2024.
Charles Kupchan, a senior fellow at the Council on Foreign Relations who worked on the National Security Council under Democratic Presidents Bill Clinton and Barack Obama, said Trump's scaling back of the exercises may prompt longtime allies to think more about their own security without U.S. help. "They are hoping that the American umbrella is there for the future," Kupchan said, "but they have to at least contemplate the idea that Uncle Sam won't be there for them."
Kupchan said Trump is not mistaken in wanting South Korea, as well as the Europeans, to contribute more to their defense, but said the president's unpredictable approach cuts through the solidarity that undergirds those alliances "because he ends up insulting allies." Fried said Trump seems unwilling to "take a win" after brow-beating NATO members and Asian allies into increasing their defense spending. "NATO is building up, South Korea is building up, Japan is building up. Trump has a problem with taking the win," Fried said. "It's like he wants to burn it all down."
John Herbst, a former ambassador to Ukraine under President George W. Bush and now with the Atlantic Council, said the Korea decision shows how inconsistent the Trump administration can be in its policy pronouncements. "If these things grow in frequency and in importance, obviously we will be in the process of taking apart the alliance system, which has served us so well since the end of World War II," Herbst said. "But despite some statements which seem to head in that direction, we have not headed there in a consistent, strong way."
Kupchan agreed that while the president's language could be taken as "we're done with you," "the reality is that, at least as of today, Trump has left intact America's forward bases and its core alliance relationships." Kroenig said, "He's an unpredictable president. If we move on and the exercises go as planned and we never hear anything about this again, I wouldn't be surprised."
Why This Matters:
The collapse of the ceasefire leaves the Strait of Hormuz—a conduit for a fifth of the world's oil and gas—under Iranian threat with no diplomatic resolution in sight. Markets have absorbed the shock through alternative routing, but the standoff's economic costs continue to accumulate as shipping remains paralyzed and regional tensions escalate. Iran's stated intention to widen the conflict raises the prospect of broader instability affecting U.S. allies and global energy markets. The administration's willingness to wait reflects confidence that economic pressure will eventually force Tehran's hand, but the timeline for de-escalation has now stretched to year-end at the earliest. Meanwhile, the friction with South Korea over burden-sharing in the Iran conflict reveals tensions in how the U.S. manages alliance commitments during protracted standoffs. The question isn't whether allies should contribute more—many agree they should—but whether unpredictable policy shifts undermine the strategic cohesion that makes those alliances effective deterrents in the first place.