Talks in Switzerland broke down after Iranian negotiators walked out in protest over fresh threats from President Donald Trump, underscoring the fragility of a memorandum of understanding signed between the two states to end monthslong conflict and normalize the critical energy transit waterway.
Trump warned that Washington could strike Iran again if Tehran failed to restrain Hezbollah, the Iran-backed Lebanese militant group whose renewed clashes with Israel have already jeopardized key elements of the accord.
"Iran must immediately stop their highly paid PROXIES in Lebanon from causing trouble," Trump wrote on social media Sunday. "If they don't, we'll hit Iran very hard again, just like we did last week, only harder."
The comments prompted Iran's delegation to suspend negotiations and leave the venue in Bürgenstock, Switzerland, according to Iranian state media.
The collapse highlights the fragility of a deal that was supposed to accomplish three ambitious goals simultaneously: end hostilities between the U.S. and Iran, reopen the Strait of Hormuz and launch a roadmap for resolving Tehran's nuclear dispute.
Instead, the Lebanon front has re-emerged as the immediate stumbling block.
An Iranian negotiator told local media that "if the war in Lebanon does not end, negotiations on other issues will not proceed."
The Strait of Hormuz, through which roughly one-fifth of global oil supplies pass, has become the ultimate leverage point.
Iran announced Saturday that it would close the strategic waterway and refocus negotiations on securing a ceasefire in Lebanon after accusing Israel of violating the agreement.
Trump reportedly warned Iranian officials against such a move. "You close it, and you won't have a country," Fox News quoted Trump as saying.
A prolonged disruption could derail the fragile disinflation process underway in major economies that are already struggling to bring prices under control. Central banks from the U.S. Federal Reserve to the Bank of Korea have repeatedly warned that energy prices remain the biggest external risk to inflation forecasts.
The latest flare-up is particularly concerning because it comes after policymakers had begun assuming that oil markets would gradually stabilize.
Unlike previous episodes, the threat now stems not from an actual blockade but from the realization that the world's most critical energy chokepoint can be weaponized repeatedly whenever negotiations falter. Even if the strait reopens quickly, risk premiums embedded in energy prices are likely to persist.
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