Key Takeaways:
The UAE and US presidents spoke Tuesday as the 60-day US-Iran negotiation window expired without a settlement, leaving the Strait of Hormuz at the center of an escalating standoff.
UAE President Sheikh Mohamed bin Zayed Al-Nahyan and US President Donald Trump discussed regional tensions in a phone call Tuesday, hours after the 60-day US-Iran negotiation window expired without progress and as shipping through the Strait of Hormuz fell sharply.
"The ceasefire has not produced agreement over Iran's nuclear and missile programs, control of the Strait of Hormuz, sanctions, or the future regional security structure," said John Keith King, strategic adviser at Q Advisory. "Both sides are using the pause to rebuild military capacity."
The call coincided with the expiry of the interim arrangement that began in June, with Washington ruling out an extension and Tehran hardening its position. Iran's Parliament Speaker Mohammad Bagher Ghalibaf said the strait would remain closed until the US lifts restrictions on Iranian ports and oil exports, releases frozen assets, and ends military operations. Brent crude rose 0.3 percent to $91.14 a barrel, while WTI gained to $85.04.
The standoff threatens a waterway that handles roughly 21 percent of global oil trade, with the UAE reporting three attacks on ADNOC-operated tankers within a week and its air defenses detecting two ballistic missiles launched from Iran on Tuesday. Shipping through the strait has fallen sharply, disrupting energy exports and raising concerns over global supply.
The phone call between Sheikh Mohamed and Trump covered UAE-US cooperation and ways to strengthen bilateral relations, the Emirates News Agency reported, without providing further details. The conversation came as diplomatic efforts to resolve the US-Iran conflict remained deadlocked.
Trump has said the US is not seeking to extend the memorandum of understanding and that Iran should "put up the white flag of surrender." He also threatened to "bomb the s*** out of" Oman if it interferes with US efforts on the strait, while claiming the waterway is "NEW U.S. Territory."
Iran, meanwhile, said it was close to finalizing an understanding with Oman on transit routes for commercial vessels through the strait. The UK Maritime Trade Operations agency reported a vessel was struck by an unknown projectile during an outbound transit, causing engine room damage and a crew casualty.
The expired window has functioned as a period of military reconstitution on all sides. Iran has used the reduced fighting to repair launchers, restore access to damaged underground missile facilities, and accelerate missile and drone production. The Wall Street Journal reported satellite imagery showed Iran reopening 50 of 69 entrances at 18 underground missile facilities, while Reuters reported Tehran was preparing to receive up to 400 shoulder-fired air-defense missile launchers from China.
Israeli estimates put Iran's surviving missile arsenal at roughly 1,000 missiles capable of reaching Israel, with about two-thirds of launchers still operational. Danny Citrinowicz, senior researcher at the Institute for National Security Studies and former head of the Iran branch in Israel Defense Intelligence, said Iran retained sufficient missiles and launchers to sustain hostilities for weeks or months.
The US faces its own replenishment problem. Washington announced framework agreements worth more than $3 billion to expand production of Patriot and THAAD interceptor components, with the Pentagon saying the agreements could eventually triple Patriot production capacity and quadruple THAAD production. The US military also awarded RTX a $22.9 billion contract to increase Tomahawk production.
The International Institute for Strategic Studies reported May 12 that Iranian missile and drone attacks had depleted Gulf countries' interceptor magazines, prompting Saudi Arabia and other states to seek additional air-defense systems and ammunition.
The Strait of Hormuz handles roughly 21 percent of global oil consumption, and the confrontation has already pushed Brent above $91 a barrel. The last time the strait faced a sustained closure threat was during the 2019 tanker attacks, when Brent spiked more than 14 percent in a single session before retreating as supply disruptions proved temporary.
King described the current environment as "an armed pause within an unresolved conflict," warning that Iran's rearmament could encourage another preventive strike while continued US or Israeli threats convince Tehran that accelerating missile production is essential for survival.
"The only sustainable alternative is an enforceable agreement covering more than the nuclear issue," King said. "It would require verifiable limitations on missile production and deployment, reliable inspection mechanisms, protected navigation through Hormuz, military deconfliction channels, and phased economic incentives tied to compliance."
Qatar's Foreign Ministry said mediators will resume efforts to restart US-Iran talks after a bilateral deal between Iran and Oman on the strait is announced. Trump's approval rating has fallen to 33 percent, the lowest of his presidency, as most Americans expect the war to continue for an extended period, a Reuters/Ipsos poll found.
This article is for informational purposes only and does not constitute investment advice.
