“They’re liars, they’re cheats, they’re sick people.”
Those were Trump’s comments this morning following another round of Iranian attacks on ships in the Strait of Hormuz and Spain’s refusal to push 5% of their GDP into Trump’s Defense Contractor donors. “To me, I think it’s over, I don’t want to deal with them anymore,” said the President – though it’s now unclear which enemy he was talking about.
As you can see from the images – there is a clear violation of the cease-fire – by US – YESTERDAY but, this morning, Iran dared to fire back and that is one thing a bully WILL NOT stand for (unless his bone spurs are hurting). So the short story is the war that caused the US markets to climb 20% in April and May is back on in July – get ready for an exciting summer!
🥷 How It All Fell Apart: A 36-Hour Obituary for the Islamabad MoU
Let’s be precise about the sequence, because the “who started it” question is genuinely contested and both sides have legitimate grievances mixed in with their usual mendacity.
Monday night, July 6th — The Match That Lit the Fuse:
Two ships were attacked in or near the Strait of Hormuz. The Qatari-owned LNG tanker Al Rekayat was struck by a projectile and caught fire in its engine room — dangerously close to exploding. The Saudi-flagged supertanker Wedyan was also hit. A third vessel was damaged. Per Wikipedia’s Hormuz crisis page, Iran’s IRGC fired the missiles. Iran’s framing: the ships were using the Oman-side route instead of Iran’s designated corridor — i.e., they weren’t paying the toll. Iran maintains this is legitimate enforcement of its Strait governance protocol, which is not what the MoU said but is very much what Iran thinks the MoU said. wikipedia
Tuesday, July 7th — The US Escalation Sequence:
CENTCOM launched strikes on 80+ targets in southern Iran — Qeshm Island (6 explosions), Sirik (7 explosions), Bandar Abbas, and critically: Kharg Island again, per CNN. Simultaneously, the Treasury Department — in what Al Jazeera called “a blatant violation of Article 10 of the Islamabad MoU” — revoked Iran’s oil sanctions waiver with effect from July 17. Iran had been banking $8-10 billion from oil sales under that waiver. Treasury didn’t just cancel future waiver renewal. It cancelled transactions already in progress. Iran’s deputy FM Gharibabadi went on social media within the hour: the US just violated Articles 1, 2, and 10 of the MoU simultaneously. cnn+1
The critical detail your readers need: The US struck Iran during the funeral of Supreme Leader Mojtaba Khamenei. His father Ali Khamenei was killed February 28th — Day 1 of the war. His body had only just arrived in Qom for burial after 130 days. The US bombed Iran during the national mourning period for the man the US killed to start the war. Whatever the military justification, the optics inside Iran are incendiary.
Tuesday evening — Iran Retaliates:
Iran’s IRGC launched strikes targeting US military sites in Bahrain and Kuwait, per Audacy/AP. Air defense systems activated in both countries. Iran’s Foreign Ministry: “devastating retaliation” promised. Four oil and gas tankers immediately turned back from the Strait per Reuters. The partial Hormuz recovery — which had reached 108 crossings over a single holiday weekend per Kpler — evaporated in hours. UKMTO raised the threat level to “severe.” audacy+1
Wednesday morning, Ankara — The NATO Summit Combustion:
Trump arrived at the NATO summit in Turkey and, in the span of approximately 20 minutes standing next to Secretary General Rutte, declared:
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The Iran MoU is “over“ — “I don’t want to deal with them anymore. They’re liars, they’re cheats, they’re sick people.”
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All trade with Spain is cut off — “Spain is a terrible partner. They’re hopeless. They’re bad people. Cut off all trade with Spain, including visits. Don’t even talk to them.” Turning to Bessent: “Take it immediately.” Bessent: “Yes, sir.”
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Iran cannot govern the Strait of Hormuz — “They cannot blackmail the world.”
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The beauty of the ambiguity you identified, Phil, is real: in that single press availability Trump simultaneously declared war over and not over, severed ties with both an enemy country AND a NATO ally, and left every financial market on earth trying to figure out which sentence was the policy and which was the venting.
Spain’s PM Sánchez response? His office said they’re treating it as “business as usual.”
Spain has heard the trade-cut threat roughly six times since March and nothing has happened, because — as German Chancellor Merz helpfully explained to Trump in March — you cannot sanction one EU country without sanctioning all of them and the EU’s trade commissioner, not Scott Bessent, runs EU trade policy.
The EU is not a collection of 27 separate trade relationships that can be individually severed by presidential instruction.
Nobody has explained this to Trump in a way that has stuck.
The Scorecard on Who Violated What
Iran’s deputy FM published his legal argument and he’s not entirely wrong:
Iran’s case:
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Article 1 of the MoU: cessation of military operations. US struck 80+ targets on July 7.
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Article 2: end of blockade. US revoked the oil sanctions waiver — effectively reimposing the economic blockade.
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Article 10: sanctions relief. Treasury cancelled in-progress Iranian oil transactions.
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US case:
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Iran fired on three ships using the internationally recognized corridor, not the IRGC-designated toll route
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Article in the MoU specifically prohibits attacks on commercial shipping
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The 80+ strikes are “defensive” and “in response to 3 Iranian ceasefire violations“
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The honest verdict: Both sides violated the MoU. The sequence matters: Iran shot at ships first. The US then struck 80 targets and cancelled the oil sanctions waiver. Iran then struck Bahrain and Kuwait. The MoU’s “violations” are bilateral and reciprocal — which is exactly what happens when you sign a document with two parties that don’t trust each other and defer all the hard questions to a 60-day negotiating window that has so far produced “continue discussions.“
The Markets: Exactly What You’d Expect
Per CNBC, US News, and NDTV: money. usnews+1
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Dow futures: -700 points
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Nasdaq futures: 4-week low
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Brent: +5%, touching $76 — from $73 yesterday
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WTI: +5%, above $72 — from $69 yesterday
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Energy stocks: surging in premarket — the one sector that loves this news
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The war premium that spent three weeks coming out of oil is putting itself back in. The $45 war premium at peak was Brent at $119 vs. $73 pre-war. We’re now at $78 and rising ($74 on WTIC). We gave back $43 of the war premium over six weeks. We just added $3-5 back in 36 hours.
Saul Kavonic at MST Marquee put the forward trajectory clearly: “Oil prices will remain elevated as hazardous conditions persist in the strait and the release of emergency oil stockpiles winds down.” Société Générale’s $75 Q4 forecast just became a floor, not a ceiling.
The One Thing That Might Actually Save the MoU
Before you fully write its obituary, note this from Audacy/AP: “neither country immediately signaled they’d step away from the negotiating table.” audacy
Iran’s FM called the US strikes a violation of the MoU — but framed it as a violation TO BE REMEDIED, NOT a reason to declare war. Trump said the deal is “over” from a NATO summit podium while his chief negotiator Witkoff has not resigned or issued a statement. Witkoff staying in position is the tell.
The structural reality neither side has escaped: Iran needs the oil sanctions relief ($8-10B they were banking). The US needs oil below $80 for midterm positioning (Trump is almost certain to be impeached for multiple reasons if the GOP loses in November). Those two needs don’t disappear because Trump said “sick people” in Ankara. They just get renegotiated again, probably through Pakistan, probably starting next week, probably after both sides have made their domestic political points.
TACO #6 is already printing. The question is just the timetable.
Bone Spurs, Bullies, and the Bottom Line
The pattern since February 28th has been so consistent that it now has predictive power: Trump threatens maximum force → something happens that makes maximum force inconvenient → Trump announces productive talks → Iran denies them → a deal is announced → the deal starts falling apart → Trump threatens maximum force again.
We are on iteration six of this cycle. The war that was supposed to last 4-5 weeks is on Day 131. The MoU that was supposed to end it lasted 19 days before the oil sanctions waiver was revoked and 80 targets were struck.
Spain, meanwhile, has already called Trump’s trade cutoff “business as usual” — which is the diplomatic equivalent of your kid rolling their eyes at you and going back to their phone. Spain has been threatened with trade cutoffs approximately six times since March. Spain’s economy remains intact. Spain’s prime minister remains in office. Spain spent 2.1% of GDP on defense and has no intention of spending 5%.
The bone spurs are clearly bothering him this week. Get ready for an exciting summer indeed!
