The renewed exchange of strikes between the US and Iran resurrects the supply disruption premium that had begun unwinding as vessels moved through Hormuz over the prior fortnight. With both sides now publicly accusing the other of breaking the interim accord and the IRGC warning American bases face escalating retaliation, the risk of a full ceasefire collapse is no longer a tail scenario. The parallel fragility in Lebanon adds a second front that complicates any diplomatic off-ramp. Shipping confidence, which had shown tentative signs of recovery with vessels departing the strait, is likely to stall pending clarity on whether the 14-point accord can be salvaged, keeping freight and insurance risk premiums elevated. Crude markets will be watching the status of the southern Omani lane and whether Iranian threats to re-close the strait translate into fresh tanker incidents.

Crude futures open for trade for the week at 6pm US Eastern time (2200 GMT). Meanwhile the USD is reasonably sanguine:

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Iran fired missiles and drones at US military bases in Kuwait and Bahrain on Sunday; the US struck Iranian sites in retaliation, with both sides accusing the other of breaking their interim ceasefire accord. (204 chars)

Summary:

• Iran’s Islamic Revolutionary Guard Corps launched missile and drone strikes against US military facilities in Kuwait and Bahrain on Sunday, according to an IRGC statement carried by state media
• The US military confirmed it struck Iranian targets in the Sirik area of southern Iran, citing continued Iranian aggression against commercial shipping following a drone attack on a Panama-flagged tanker on Saturday, per US Central Command
• President Trump warned on social media that the US may be forced to “militarily complete the job” and that the Islamic Republic of Iran would “no longer exist” if escalation continued, according to his post
• A US official told Reuters there were no reported American casualties or major damage to US sites in the region, though the situation remained fluid at the time of reporting
• Kuwait’s army said it intercepted two ballistic missiles without casualties; Bahrain reported an Iranian strike damaged a residential building in Muharraq province, also without casualties, according to Bahraini authorities
• Israel struck Hezbollah targets in Lebanon’s Nabatieh area on Sunday despite a fresh US-brokered ceasefire agreed the previous Friday, further complicating the broader regional accord, per Israeli military statements

The fragile ceasefire between the United States and Iran deteriorated sharply over the weekend, with both sides conducting fresh strikes and trading accusations of bad faith in a confrontation that threatens to unwind weeks of difficult diplomacy and reignite the full supply disruption that briefly choked one-fifth of global oil and LNG flows.

Iran’s Islamic Revolutionary Guard Corps launched coordinated missile and drone attacks against American military facilities in Kuwait and Bahrain early on Sunday, hours after a US airstrike on the Iranian coastal town of Sirik. Tehran framed its strikes as a direct response to what it characterised as American violations of the 14-point interim accord, with the IRGC warning that US bases across the region would face sustained retaliation in the days ahead and that all diplomatic processes were now at risk of full suspension.

Washington offered a mirror-image account. US Central Command said its strikes were a direct response to continued Iranian aggression against commercial shipping, following a drone attack on a Panama-flagged tanker in the Strait of Hormuz on Saturday, itself coming two days after a cargo ship was hit on Thursday. Both incidents, Central Command said, demonstrated that Iran had chosen not to honour the ceasefire agreement it had entered into.

President Trump sharpened the confrontation with a public social media post warning that the United States may no longer be able to remain reasonable and could be forced to militarily complete what it had begun, adding that the Islamic Republic of Iran would cease to exist if that point were reached.

A US official confirmed that Iran had targeted American facilities but said there were no reported casualties or significant damage, though the situation remained fluid. In Kuwait, the army said it had intercepted two ballistic missiles without casualties. In Bahrain, a residential building in Muharraq province sustained damage in a second wave of Iranian strikes, though again without reported casualties; Bahrain subsequently called on the UN Security Council to convene urgently.

The diplomatic machinery established to manage the conflict is now under severe strain. One round of mediated talks, led by Vice President JD Vance and Iran’s parliamentary speaker, had taken place in Switzerland the prior week, with Washington waiving sanctions on Tehran as a gesture of goodwill. That momentum has since evaporated.

Complicating the picture further, Israel struck Hezbollah positions in Lebanon’s Nabatieh area on Sunday despite agreeing to the latest US-brokered ceasefire with Lebanon only the day before. Iran’s foreign minister had made clear that an Israeli halt to Lebanese operations was a condition of the broader US-Iran accord, placing Washington in the position of managing an ally whose actions are actively undermining the wider settlement.