# SITREP: 2026-06-28 (Day 121) Lead: TWO NIGHTS OF FIRE, ONE DOCUMENT HOLDING BY A THREAD Compiled by a language model from that day's archived articles; analysis, not archive record. Page: https://iranwar.liminallayers.com/bulletins/sitrep-2026-06-28/ Licence: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/); sources remain their publishers'. ## OVERVIEW The Islamabad Memorandum of Understanding is now being tested not by accident or misinterpretation but by deliberate escalation on both sides. The US struck 10 Iranian military targets around the Strait of Hormuz this weekend after Iran hit the Kiku tanker. Iran responded by firing ballistic missiles and drones at the US Fifth Fleet in Bahrain and the Ali Al Salem airbase in Kuwait, for the second consecutive night. Trump has threatened to "militarily complete the job" and warned that Iran "will no longer exist" if he does. The IRGC says any further US action will trigger a "crushing response" and that it may pull out of nuclear negotiations entirely. Both sides are still nominally inside the MOU. Neither is behaving like it. ## Lead story: TWO NIGHTS OF FIRE, ONE DOCUMENT HOLDING BY A THREAD Here is where things stand after 48 hours of exchanges that neither side has yet formally declared a war restart. Friday: Iran hits the Singapore-flagged Ever Lovely container ship in the strait. The US strikes Iranian sites near Sirik in retaliation. Saturday: Iran drones the Panama-flagged tanker Kiku, carrying over two million barrels of crude, damaging its bridge. US Central Command (CENTCOM) responds with strikes on 10 Iranian military targets, including surveillance infrastructure, air defence sites, drone storage, and mine-laying facilities at Sirik, Bandar-e Lengeh, and Qeshm Island [9] [11]. Sunday: Iran's Islamic Revolutionary Guard Corps (IRGC) fires ballistic missiles and drones at the US Navy's Fifth Fleet at Port Salman in Bahrain and the Ali Al Salem airbase in Kuwait, for the second straight night [1] [9]. Kuwait said it intercepted two ballistic missiles with no casualties or damage [3]. Bahrain reported damage to a residential building near its international airport, again no fatalities [3]. A Qatari national was killed by shrapnel from "military operations in the area" while on a boat near the strait [3]. Qatar's interior ministry did not specify whether Iranian or US munitions were responsible. That ambiguity is itself significant: in an environment of overlapping fire, attribution is becoming harder and the risk of unintended escalation is rising. The core dispute is still about who controls the transit routes. The US has been promoting a southern corridor along the Omani coast. Iran insists all ships use a northern route through its waters, under its direct oversight, and says the Omani-route ships are unauthorised. CENTCOM says it is responding to illegal attacks on commercial shipping. Tehran says it is enforcing its rights as a coastal state under a clause the MOU left deliberately vague [2] [4]. Article 5 of the MOU says Iran will use its "best efforts for the safe passage of commercial vessels with no charge for 60 days." It does not define what counts as an authorised route. It does not give the US or any other party the right to establish a parallel corridor. That gap is now being filled with ordnance [4]. The thing no one is saying out loud: both governments have an incentive to keep firing while keeping the MOU nominally alive. Iran reinforces its Hormuz authority with every ship it turns back or hits. The US demonstrates it will not concede that authority with every retaliatory strike. Each side is using military action to improve its bargaining position for the next round of talks, which neither has yet formally cancelled. That is a sustainable strategy until a missile hits something it wasn't supposed to, or until one leader decides the domestic pressure to escalate fully outweighs the cost of ending the deal. Trump's "will no longer exist" language on Truth Social is the loudest version of that pressure [3] [11]. It is worth noting that he posted it before the second night of Iranian strikes, not after. The IRGC's warning that it will hit "harder" and "more decisively" came after [1]. The escalatory rhetoric is running ahead of the military action, which is either reassuring or alarming depending on how much you trust either side to hold the line. ## ALSO NOTABLE - **The IRGC has explicitly threatened to withdraw from nuclear negotiations.** Its Sunday statement warned that "violating the ceasefire constitutes a breach of Clause One of the Islamabad understanding and will result in the complete suspension of all related processes" [1]. That is not just rhetoric about the Hormuz dispute. It is a direct threat to walk away from the nuclear working group, the 60-day sanctions waiver, the asset unfreezing, and everything else the MOU set in motion. The IRGC is telling Washington that the price of the southern corridor is the entire diplomatic architecture. - **Congress passed a war powers resolution demanding Trump seek approval or halt operations, and he struck Iran again anyway.** The Senate passed the resolution 50-48 on Tuesday, with four Republicans crossing the aisle [6]. The House passed a companion measure on June 3. Democratic Representative Ro Khanna called the weekend strikes "a blatant violation" and threatened to take Trump to court [6]. Legal experts quoted by Al Jazeera note the resolution is technically nonbinding, meaning Trump can ignore it and probably will, but the political cost accumulates with every strike he orders without congressional sanction [6]. - **Iraq carried out sweeping pre-dawn raids on its own Green Zone, arresting over two dozen politicians and officials on corruption charges** [8]. The operation involved the Counter-Terrorism Service, the Iraqi Army, and the Integrity Commission, hitting targets in Baghdad and multiple provinces. Among those arrested: the Deputy Oil Minister for Refining Affairs and several members of parliament [8]. A Popular Mobilization Units (PMU) leader said the campaign would continue until Prime Minister Ali al-Zaidi's planned July 17 Washington visit [8]. Read this in context: Zaidi was installed with Trump's blessing after Washington vetoed Nouri al-Maliki, and the arrests disproportionately appear to target Iran-aligned political figures. Whether this is genuine anti-corruption enforcement or a US-backed political cleanse ahead of the Washington visit is a question the available sources raise but cannot resolve. Either way, Iraq's domestic politics are shifting fast, and not in Tehran's favour. - **Israel's first fatality since the Lebanon framework was signed occurred within 24 hours of the ink drying.** Captain David Hazutt, 21, a platoon commander in the Golani Brigade, was killed in a clash with a Hezbollah gunman in the village of Deir Siryan [7]. Hezbollah leader Naim Kassem said the group would keep fighting until Israel leaves Lebanon, and Hezbollah's parliamentary bloc is already warning of internal Lebanese conflict over the deal [5] [15]. The framework links Israeli withdrawal to Hezbollah's full disarmament, which Hezbollah has explicitly rejected. Netanyahu says Israel will stay "until Hezbollah and the rest of the terrorist organizations are disarmed" [13] [15]. Those two positions do not overlap. - **Secretary of State Marco Rubio acknowledged Gulf states have "very concrete concerns" about Iranian proxy activity that the MOU does not address** [10]. Analysts cited by the Guardian say Iran is likely to increase, not decrease, support for Hezbollah, Iraqi militias, and the Houthis after the conflict, having confirmed that its strategic framework survived a direct US-Israeli assault [10]. The Gulf states signed up to regional security arrangements that assumed a weakened Iran. What they are getting is an Iran that is militarily damaged but strategically emboldened and still actively projecting power through proxies. ## MARKETS & MONEY Oil fell again, which at this point is the market's most reliable tell. Brent dropped from $75.00 to $72.60 over the past two sessions despite confirmed tanker strikes, missile attacks on two Gulf capitals, and Trump threatening Iran's existence [[market data]]. The Oil Volatility Index (OVX) also fell slightly to 46.46 [[market data]]. Markets are still pricing the MOU as structurally intact, which may be rational or may be dangerously behind the news cycle. The number that stands out is Frontline, the tanker operator, which has now dropped from $40.93 on June 19 to $35.52, a 13% fall in 10 days [[market data]]. The broader shipping index is barely down. Someone is pricing tanker-specific risk into that stock, and they are doing it consistently and directionally. Watch whether Frontline continues to fall while crude holds: that would signal the market believes oil will flow but tanker operators will take the pain of insurance repricing and route disruption. Gold ticked up again to $4,096, and the Gold/Oil ratio hit 59.17, the highest in this dataset [[market data]]. The Israeli TA-125 index has dropped from 4,432 in late May to 3,968 [[market data]]. Quiet money is still hedging. It is not panicking. But it is not unwinding either. ## WESTERN IMPACTS The war powers fight in Congress is now directly colliding with live military operations. Trump ordered strikes on Iran on Saturday and Sunday after the Senate had already told him he needs congressional approval. Democratic lawmakers are threatening legal action [6]. Republican leadership is holding the coalition together senator by senator, which is not a sustainable management strategy heading into autumn. The political cost of each additional strike without authorisation is not zero, and it is compounding. On energy: wholesale crude prices are now below pre-war levels, but retail pump prices remain significantly elevated due to refining and distribution lag. The Kiku tanker strike adds a new transmission mechanism: if Gulf maritime insurers begin repricing war risk premiums for Hormuz transits this week, that cost eventually reaches the pump even if Brent stays below $75. Watch for Lloyd's of London market commentary in the next 48 hours. ## WHAT TO WATCH 1. **Whether Iran follows through on its threat to suspend nuclear negotiations.** The IRGC's statement was explicit [1], but Iran's Foreign Ministry has not yet formally echoed it. If Araghchi uses his Baghdad platform to either walk back or confirm the threat, that statement will be the most important piece of text this week. A confirmation means the 60-day diplomatic clock may effectively stop. A walk-back means Tehran is still managing the MOU even as its military arm fires missiles at US bases. 2. **Iraqi Prime Minister Zaidi's Washington visit on July 17 and what precedes it.** The Green Zone arrests are being framed domestically as anti-corruption enforcement, but the targeting pattern and the explicit link to Zaidi's US trip suggest this is also political preparation [8]. Watch whether the arrested figures include any leaders of factions that have refused to disarm, particularly Kataib Hezbollah and Harakat Hezbollah al-Nujaba. If so, Zaidi is handing Trump a deliverable, and that will reshape the Iraq-Iran-US triangle significantly. 3. **The Lebanon framework's first test: the pilot zone handover.** Israel committed to withdrawing from two small areas in southern Lebanon under LAF control [13] [15]. No timetable has been made public. If the handover begins in the next 48-72 hours, even symbolically, it will be the first tangible Israeli withdrawal from Lebanese territory since the conflict began and the first proof the framework is more than a press release. If it stalls, Hezbollah's rejection will look increasingly like the operative reality on the ground. ## References 1. [TTM] Tehran Times: Iran to respond more forcefully to MoU violations after 2nd night of fire exchange with US 2. [GDN] The Guardian — Middle East: Fresh hostilities in Gulf suggest US-Iran memorandum was too broadly worded 3. [GDN] The Guardian — Middle East: Escalating US-Iran strikes threaten interim peace agreement 4. [AJE] Al Jazeera: What is Article 5 of Iran-US MoU, and why is it blamed for Hormuz strikes? 5. [GDN] The Guardian — Middle East: Donald Trump threatens to annihilate Iran after crossfire over Hormuz, Middle East crisis live 6. [AJE] Al Jazeera: US strikes Iran for second day: Is it a violation of war powers resolution? 7. [TOI] The Times of Israel: IDF officer killed in clash with Hezbollah gunman in south Lebanon 8. [CRD] The Cradle: Iraqi forces storm Green Zone, arrest politicians in 'anti-corruption' crackdown: Report 9. [AJE] Al Jazeera: Iran attacks Kuwait and Bahrain in response to US strikes 10. [GDN] The Guardian — Middle East: Gulf shares concerns with US as Iran’s influence and power continue by proxy 11. [TOI] The Times of Israel: Trump threatens to ‘complete the job’ in Iran as US military launches fresh strikes 12. [BBC] BBC News: US launches strikes on Iran after second shipping attack 13. [TOI] The Times of Israel: PM: Iran, Hezbollah to have ‘no role in Lebanon’ under deal, Israel can maintain security zone 14. [GLT] Global Times: Fresh US-Iran strikes expose fragility of MoU, with contest over Strait of Hormuz: Chinese expert 15. [APW] Associated Press: Lebanon-Israel deal requires Hezbollah's disarmament 16. [PTV] Press TV: US-led coalition forces will withdraw from Iraq by September, says PM Zaidi