A memorandum promising Iran up to $300 billion in reconstruction money lasted 19 days before Tehran broke it. Signed in Islamabad on June 17, the deal was supposed to end the war between Iran and the United States and reopen the Strait of Hormuz to global shipping. Instead, missiles and drones have hit at least seven Arab states since early July, from a Kuwaiti desalination plant to a Jordanian air base.
Governments across the Gulf are condemning the attacks one at a time. Marine insurers got there first. Weeks before Arab foreign ministries finished drafting statements, underwriters in London had already repriced Strait of Hormuz transits at up to 40 times their prewar cost.
A $300 Billion Promise Signed in Islamabad
The deal had a name built for a press release: the Islamabad Memorandum of Understanding between the United States of America and the Islamic Republic of Iran. Pakistani Prime Minister Shehbaz Sharif brokered it, with Qatar, Saudi Arabia, Turkey and Egypt helping push it over the line. President Trump and Iranian President Masoud Pezeshkian agreed the terms, and the document was signed electronically on June 17, with U.S. Vice President J.D. Vance and Iranian parliament speaker Mohammad Bagher Ghalibaf putting their names to it.
The fourteen-article text of the agreement called for an immediate halt to military operations, a reopening of the Strait of Hormuz to commercial shipping within 30 days, and a 60-day window for both sides to negotiate a permanent settlement covering sanctions, Iran’s nuclear program and regional security. In exchange, Washington and its partners pledged to develop a plan worth at least $300 billion for Iran’s reconstruction and economic development. A billboard went up in Islamabad showing Sharif and army chief Asim Munir under the words declaring the nation grateful for the peace.
Nineteen Days From Signature to Collapse
The timeline from signature to gunfire is short enough to fit on one page.
- June 17, 2026: The Islamabad memorandum is signed, halting the war that began February 28 and promising safe, free passage through Hormuz.
- July 6, 2026: Iran resumes attacks on commercial vessels transiting the strait, despite its pledge of safe passage.
- July 8, 2026: President Trump says the deal is over. The Arab League and the UAE condemn a fresh Iranian strike on a Saudi oil tanker in Hormuz.
- July 9, 2026: Iranian drones hit sites in Kuwait, Qatar and Bahrain, described by Tehran as retaliation for new U.S. strikes.
- July 12, 2026: Iran fires on Bahrain, Qatar, Kuwait, Oman, Jordan and the UAE in a single coordinated barrage after a third round of U.S. strikes.
- July 17 to 18, 2026: A sixth straight night of U.S. strikes on Iran is met with renewed Iranian fire on Bahrain, Iraq, Kuwait, Oman, Qatar, Jordan and Syria. Tehran confirms the memorandum is suspended.
Nineteen days is how long it took to go from a billboard in Islamabad to sirens in Manama.
Seven Countries Take Direct Hits
Iran’s own military has framed the strikes as retaliation against American bases hosted on Arab soil. The damage on the ground tells a broader story.
| Country | What Iran Targeted | Confirmed Detail |
|---|---|---|
| Kuwait | Oil facility, power station, desalination plant, international airport | Flights suspended; one person injured after three ballistic missiles, a cruise missile and 10 drones were intercepted on July 9 |
| Qatar | Intercepted drones over populated areas | Three people, including a child, wounded by falling shrapnel; targeted twice within a single week |
| Bahrain | Residential building in Muharraq; air defense sites | Interior ministry sounded sirens twice in one day and urged residents to shelter |
| Jordan | Prince Hassan air base | Eight incoming missiles shot down by Jordan’s military; the IRGC claimed a command center was destroyed |
| Oman | Airspace and coastal approaches | Muscat, long a mediator between Washington and Tehran, said it took all necessary measures to protect residents |
| UAE | Two supertankers; Dubai airport vicinity | One sailor killed in a tanker strike; explosions heard near Dubai International Airport |
| Saudi Arabia | Oil tanker in the Strait of Hormuz | Riyadh issued emergency missile alerts and condemned the strike as a clear violation of international law |
Iran’s Jordan strikes, including the barrage on the kingdom’s Prince Hassan air base, are covered in more depth in reporting on how Iranian missiles reached inside Jordanian territory. Abu Toameh’s Gatestone Institute analysis of the campaign also alleges that Iran used Chinese and Russian targeting assistance to resume fire after the ceasefire lapsed, a claim that echoes separate reporting on Iran’s use of Chinese satellite guidance against U.S. bases.
Insurers Are Already Pricing This War
Long before Arab foreign ministries finished their statements, the marine insurance market had already put a number on the risk. Those numbers did not wait for a diplomatic verdict.
- 0.25% baseline: war risk premiums on Hormuz transits before the war began February 28.
- 3% to 10% now: the current range for hull war-risk premiums, with underwriters citing roughly 5% as the new market norm.
- $3 million to $10 million: the added cost for a $100 million tanker to cross the strait once, up from about $250,000 before the war.
- 95% drop: the fall in daily strait crossings from a prewar average of 178 ships a day.
Neil Roberts, head of marine and aviation at the Lloyd’s Market Association, told Xinhua that rates had softened when the memorandum was signed in June but jumped again after vessels came under fire. Marcus Baker, global head of marine, cargo and logistics at Marsh, described war rates as having moved on a roller coaster mirroring the price of oil. The U.S. International Development Finance Corporation has already tried to backstop the market, unveiling a reinsurance facility worth up to $40 billion to keep tankers moving, with Chubb signing on as a lead underwriting partner. A broker analysis from Howden Re warned that Gulf refineries and LNG terminals face concurrent, correlated losses that could make some offshore energy assets effectively uninsurable at standard terms even after the fighting stops. This is not confined to tankers passing through Hormuz. Houthi attacks in the Red Sea have already forced some Saudi cargo to be rerouted around Africa toward the Suez Canal, meaning Gulf shippers now face rising costs on more than one route at once.
Arab Capitals Draw a Line
The diplomatic response has been loud and largely uniform. Arab League Secretary-General Nabil Fahmy said the escalating pace of Iran’s attacks on Kuwait, Qatar, Bahrain, Jordan and Iraq’s Kurdistan region reflected an aggressive approach that could not be tolerated. Jasem Mohamed Albudaiwi, Secretary-General of the Gulf Cooperation Council, said Iran’s conduct was a grave violation of international law, the U.N. Charter and Security Council Resolution 2817, which explicitly demands Iran halt attacks and threats against its neighbors. Six Gulf states, the UAE, Kuwait, Bahrain, Saudi Arabia, Qatar and Jordan, issued a joint statement condemning what they called a flagrant violation of their sovereignty and territorial integrity.
Bahraini officials and analysts describe a public mood hardening in real time.
Iran is being recast from a distant geopolitical actor into the immediate source of instability.
Ahmed Alkhuzei, a Bahrain-based political analyst, told the news site MBN that as the war drags on, Gulf publics increasingly experience its consequences in daily life, and are more likely to see Tehran as a destabilizing force than a distant victim of Israeli and American pressure.
Was This Deal Ever Going to Hold?
Short answer: the man now running Iran built his career inside the institution least interested in a durable peace.
Ali Khamenei, Iran’s Supreme Leader for 36 years, was killed in joint U.S. and Israeli strikes on February 28, 2026, the day the current war began. Iran’s Assembly of Experts named his son, Mojtaba Khamenei, as the country’s third Supreme Leader on March 8. Mojtaba spent decades tied to the Islamic Revolutionary Guard Corps and the Basij militia rather than to Iran’s clerical mainstream. A Carnegie Endowment analysis published as the succession played out tied his rise directly to his closeness with the security apparatus rather than to religious standing, and warned that his ascent would further entrench the IRGC inside a state already dominated by its security establishment.
That history lines up with Iran’s record on paper commitments generally. Hamas violated ceasefire terms before its October 7, 2023 invasion of Israel. Hezbollah has ignored U.N. resolutions demanding its disarmament. The Houthis kept firing on shipping through round after round of diplomacy. A regime, and a network of allied factions, that has broken those understandings was never a strong bet to honor a Pakistani-brokered memorandum the moment it stopped being convenient.
The Next Deadline Falls on August 16
The Islamabad memorandum’s 60-day negotiation window, counted from June 17, runs out around August 16. Tehran has already told mediators the deal is suspended, and Washington’s president said the same thing in different words on July 8. Whatever paper survives past that date will need enforcement mechanisms the first memorandum never had.
For the seven Arab governments now filing damage reports, the argument coming out of Jerusalem and Washington, that Gulf security and Israeli security have become the same fight, will keep gaining ground with every new siren. The insurers have already priced that reality. The rest of the region is still catching up.
