Tensions in the Middle East remain volatile as Iranian armed forces conducted missile tests on Thursday, even as negotiators work toward a potential 60-day memorandum of understanding to pause the three-month-old conflict. While reports suggest that U.S. and Iranian officials have largely aligned on the terms of a temporary truce, President Donald Trump has yet to provide final authorization for the agreement. The proposed deal would aim to extend the existing ceasefire and initiate formal nuclear negotiations, though Tehran has not yet officially confirmed its participation.

Market optimism regarding the potential de-escalation has been tempered by ongoing military activity. The Pentagon reported that Iranian forces recently launched a ballistic missile toward Kuwait and deployed attack drones near the Strait of Hormuz, both of which were intercepted. Treasury Secretary Scott Bessent emphasized that the administration maintains strict ‘red lines’ for any deal, specifically demanding that Iran surrender its highly enriched uranium and abandon nuclear weapon ambitions. Furthermore, the U.S. continues to insist that the Strait of Hormuz must remain free and open to international transit.

In a parallel effort to pressure Tehran, the U.S. Treasury has launched ‘Operation Economic Fury,’ which includes sanctions against Iran’s newly formed Persian Gulf Strait Authority. Secretary Bessent issued a stern warning to regional partners, specifically Oman, against facilitating any tolling systems for vessels navigating the waterway. Despite these economic measures and the continued use of force, the administration maintains that it is not rushing into a deal, with President Trump dismissing the notion that the upcoming midterm elections are influencing his foreign policy strategy.