# SITREP: 2026-06-25 (Day 118) Lead: IRAN KEEPS THE HOSTAGE, EVEN AS IT WAVES HELLO Compiled by a language model from that day's archived articles; analysis, not archive record. Page: https://iranwar.liminallayers.com/bulletins/sitrep-2026-06-25/ Licence: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/); sources remain their publishers'. ## OVERVIEW The Strait of Hormuz is now the deal's central battlefield, with Iran's Islamic Revolutionary Guard Corps (IRGC) flatly rejecting UN and Omani-coordinated evacuation routes for trapped ships just as oil prices fell back to pre-war levels. That contradiction tells you everything about where Tehran's head is: happy to let the price fall, unwilling to let go of the lever. Meanwhile the Israel-Lebanon talks have formally collapsed in all but name, the US asked Congress for $87.6 billion in war funding, and Trump's congressional coalition is visibly fracturing under the weight of a war that has now lasted four months longer than anyone officially planned. ## Lead story: IRAN KEEPS THE HOSTAGE, EVEN AS IT WAVES HELLO Brent crude briefly fell below its pre-war price this week. On the surface, that looks like the Hormuz crisis unwinding. Dig one layer down and it is nothing of the sort. The International Maritime Organization (IMO) and Oman jointly announced new evacuation lanes for the hundreds of ships still trapped in the Gulf, coordinated with the Oman National Hydrographic Office [2]. It was a practical, sensible proposal: one northern route through mined Iranian sovereign waters, one more passable southern route through Omani waters. The IRGC navy then rejected both routes, called them "unacceptable and completely dangerous," and warned that "traffic of vessels outside the official routes is prohibited" [2] [4]. The order was unambiguous: coordinate with the IRGC or face enforcement action. Here is the thing the IRGC's statement did not need to say out loud: Iran never agreed to the IMO proposal in the first place. The Oman National Hydrographic Office issued the coordinates without Iranian sign-off, and the IRGC publicly humiliated that process the moment it appeared [2]. This is significant because it reveals a gap between Oman's vision for Hormuz and Iran's that the two countries have been quietly trying to paper over. Oman wants something like the Malacca Strait model: a managed international waterway with shared governance. Iran wants something closer to a toll road that it owns [2]. Parliament Speaker Mohammad Ghalibaf, Iran's chief negotiator, was explicit about the stakes: "Everyone should know that the administration of the Strait of Hormuz will never go back to the way it was before the war" [2]. That is not a bargaining position. That is a statement of strategic intent from the man who signs Iran's negotiating papers. Why does this matter right now? The MOU signed last week commits Iran to making its "best efforts" to ensure freedom of navigation for a minimum of 60 days, with no tolls. Trump reinforced this Thursday, saying fees would be "unacceptable to me" under any final deal [10]. But Iran's IRGC rejected a UN-backed route as soon as it appeared. The 60-day window has not been explicitly violated. The signal, however, is clear: Tehran will control which ships move, when, and through what corridors. The strait is open on Iranian terms, not international ones. That distinction will matter enormously when the 60-day clock expires. The practical consequence is that evacuation of the hundreds of still-trapped vessels is now in limbo. A limited northern passage exists with IRGC permission. A southern route exists in Omani waters. Neither has the coordinated clearance that mass evacuation requires [2] [4]. Ships are moving, slowly. The logjam is not clearing at the pace markets assumed when they pushed oil back below $73. ## ALSO NOTABLE - **The Israel-Lebanon talks are dead in the water, and both sides are now blaming Washington for it.** The fifth round of US-led negotiations was described by sources on both the Israeli and Lebanese sides as the worst yet, marked by "tense and negative" atmosphere [1] [10]. The cause is the same on both sides: the US inserted Lebanon into the Iran MOU without consulting either party, and both are furious about it for opposite reasons. Israel thinks it hands Iran a veto over Israeli military conduct in Lebanon. Lebanon thinks it signals Iran has more influence over Lebanese territory than Beirut does [10]. Neither is wrong. Meanwhile Israeli Defence Minister Israel Katz declared Israeli forces will not leave Lebanon "even if there is an American demand," adding that 200,000 displaced Lebanese civilians "will not return" to their homes [1]. The State Department had publicly claimed Israel was scaling back its Lebanon presence as a "good faith" gesture. Lebanese military officials, and Israeli military sources, both denied any withdrawal orders have been issued [1]. That is a case where the US government said something publicly that its own ally's army contradicted on the record. - **The IRGC Quds Force chief issued a direct public threat to Israel over Lebanon.** Esmail Qaani, speaking on Ashura, told Israeli forces to "leave all of Lebanon" or be "forced to flee in humiliation and defeat," invoking the 2000 Israeli withdrawal and the legacy of Hassan Nasrallah [5]. The timing on a Shia holy day of mourning and resistance was deliberate. This is coordinated messaging: Qaani issues the threat while Hezbollah simultaneously releases statements documenting ceasefire violations and reiterating its own restraint [5]. Iran is building a public record of Israeli provocations while keeping Hezbollah's hands visibly clean. That is preparation for something, whether escalation or a stronger negotiating position on Lebanon is the question. - **Trump asked Congress for $87.6 billion, mostly to cover war costs the Pentagon is calling "urgent."** The breakdown: $67 billion for the Department of Defense, including $21 billion for munitions resupply and $17.3 billion for operational costs [9]. This lands one day after the Senate passed a war powers resolution rebuking the conflict 50-48, with four Republicans crossing the aisle [14]. Senator Bill Cassidy's account of his shouting match with Trump is worth noting: "This was supposed to last four weeks, it's lasted four months. Our original objectives have not been achieved." [9] That sentiment is now the Republican establishment's quiet consensus, even if it stays mostly private. The $87.6 billion request is the war's most honest price tag yet, and it arrives at the worst possible political moment. - **Saudi Arabia is moving to host a Gulf-Iran reconciliation summit, with no date announced yet** [6]. Qatar's Prime Minister separately visited Muscat this week for talks on Hormuz governance [6]. The regional diplomatic architecture is quietly assembling itself in parallel to the US-Iran talks, which is both a good sign and a complication: Gulf states are pursuing their own framework because they do not fully trust Washington's bilateral process to protect their interests. Iran's rejection of the IMO Hormuz proposal will have landed badly in Riyadh, Abu Dhabi, and Kuwait City, all of which depend on strait passage for their own exports. Watch whether the summit has a Hormuz governance agenda or stays limited to non-aggression language. - **Italy explicitly denied that US aircraft used Italian bases to bomb Iran**, with Foreign Minister Antonio Tajani calling his Iranian counterpart Abbas Araghchi directly to deliver the denial [3]. This follows NATO Secretary-General Mark Rutte claiming European allies supported the strikes, which Iran's Foreign Ministry used to accuse NATO of complicity in an "unlawful war of aggression" [3] [8]. Italy and Romania are the named European members in Tehran's crosshairs. Tajani's call was notable precisely because it was proactive, not reactive: Rome is clearly worried about its exposure and is moving to contain it before the diplomatic fallout spreads. ## MARKETS & MONEY Oil is the headline: Brent briefly touched pre-war levels before settling at $75.68, and WTI is at $72.10 [[market data]]. The Oil Volatility Index (OVX) at 47.27 is well below its conflict peak but ticked up slightly from yesterday, which is the market registering the IRGC's route rejection without panicking about it [[market data]]. The direction on energy is still downward, but the IRGC's move today is a reminder that the strait is not yet freely open, and the market is only partially pricing that. Gold at $4,048 is hovering just above the psychologically significant $4,000 level, having fallen from its May peak above $4,500 [[market data]]. The Gold/Oil ratio is still at 56.15, structurally elevated, which says informed money has not fully unwound its geopolitical hedge. Defence stocks are drifting, not collapsing: Lockheed Martin is up on the week, Raytheon flat, BAE Systems and Rheinmetall both drifting lower [[market data]]. The market is pricing a war that is winding down but not over. The IRGC's rejection of the IMO route is the kind of event that could reverse that drift quickly if it escalates. ## WESTERN IMPACTS The pump price story continues to run in Trump's favour, even as the underlying Hormuz picture complicates it. Average US gasoline has dropped to around $3.93 a gallon after hitting $4 in April, and Trump is now publicly accusing Shell, ExxonMobil, and others of "gouging" drivers by not passing the oil price reduction through fast enough [7]. That is smart politics: it gives him ownership of the falling price while deflecting blame for the remaining gap onto oil majors. Whether it reflects the actual mechanics of fuel retail pricing is a different question. The $87.6 billion supplemental request is going to hit the domestic political environment hard [9]. Americans are getting cheaper fuel and simultaneously being asked to fund a war their own Senate just voted to end. That combination does not get easier between now and November. ## WHAT TO WATCH 1. **How the trapped-ship evacuation proceeds in the next 48 hours.** The IRGC rejected the UN-Oman routes today. The practical question is whether Oman can negotiate a revised framework that gives Iran sufficient sovereign control to drop its objection, or whether hundreds of vessels remain stuck while the 60-day toll-free window ticks down. A visible failure to clear the backlog will start to feed back into commodity prices and become a political problem for the MOU's credibility. 2. **Rubio's Gulf Cooperation Council (GCC) meeting outcomes from Bahrain.** He arrived Thursday to reassure Gulf allies [8]. Iran's IRGC just rejected a UN-Omani shipping proposal the same day. If the GCC communique is vague on Hormuz governance, read that as Gulf states still unsatisfied with the guarantees Washington is offering. If it contains specific language on transit rights, that is a meaningful diplomatic signal that the US has found a formulation the Gulf will accept. 3. **Whether the $87.6 billion war funding request triggers conditional amendments in Congress.** The Senate that just passed a war powers resolution 50-48 is the same Senate that has to fund the war. Watch for Republican appropriators attaching conditions to the funding, specifically anything that ties disbursement to progress benchmarks in the 60-day nuclear talks. That linkage, if it forms, hands Congress leverage over the MOU's substance that it currently lacks, and gives Tehran a new set of domestic American constraints to factor into its negotiating calculus. ## References 1. [CRD] The Cradle: Netanyahu ‘convinces’ Trump to back Israeli occupation of south Lebanon: Report 2. [GDN] The Guardian — Middle East: Iran rejects UN-backed plan to free ships trapped in strait of Hormuz 3. [MHR] Mehr News Agency: Italy rejects NATO chief claim on assisting US against Iran 4. [AJE] Al Jazeera: IRGC warns against new Hormuz route for ships: What we know 5. [CRD] The Cradle: ‘Leave Lebanon now or flee in defeat’: IRGC Quds Force chief issues new warning to Israel 6. [CRD] The Cradle: Saudi Arabia to host Gulf - Iran 'reconciliation summit' 7. [BBC] BBC News: Oil price falls back to pre-Iran war levels 8. [AJE] Al Jazeera: Iran war day 118: IRGC rejects new Hormuz route; Rubio to meet GCC leaders 9. [BBC] BBC News: Trump asks Congress for $87bn, mostly for 'urgent' Iran war costs 10. [TOI] The Times of Israel: Current round of US-led talks between Israel, Lebanon the least productive yet, sources 11. [AAM] Anadolu Agency — Middle East: US removes 28 refueling aircraft from Israel’s Ben Gurion Airport: Israeli media 12. [PTV] Press TV: Mission unaccomplished, Part I: America failed to achieve every war objective against Iran 13. [APW] Associated Press: UN nuclear agency boss signals that inspectors will visit Iran's nuclear sites 14. [ABC] ABC News Australia: Breaking: US Senate calls for Trump to end Iran war in bipartisan vote