The diplomatic framing has the US-Iran MoU in force pending a signing ceremony in Geneva. The operational reality is that the agreement is being violated openly, across air, maritime and proxy fronts, within days of the initial understanding. The Pakistani mediator credits its survival to ongoing technical talks. Tehran has just cancelled the next round of those talks.
For risk management, the question is not whether the MoU "holds" in a binary sense. It is whether each of the theatres in which it is currently being tested resolves towards de-escalation or escalation. The agreement can probably survive a setback in one theatre. It cannot survive setbacks in all of them at once.
Theatre one: the chokepoint
US strikes have hit Iranian surveillance systems, air-defence sites and drone facilities. Iran has retaliated with missile and drone operations against US sites in Kuwait and Bahrain. The IRGC has attacked a Singapore-flagged commercial vessel in the Strait of Hormuz, the first maritime incident since the MoU, and issued new directives requiring commercial and energy vessels to contact Iranian naval forces in transit.
The maritime directive matters beyond the headline incident. By formalising a requirement that commercial transit clear Iranian naval command, Tehran has built a mechanism to impose costly delays on energy shipping without firing a shot. The chokepoint can be effectively half-closed by administrative friction. Lloyd's war-risk premia for Hormuz transit have priced this in part. The secondary effect on Gulf logistics for non-energy cargo has not.
A reasonable working assumption for the next ninety days: maritime incidents in the Strait remain frequent enough to keep insurance premia elevated, but not severe enough to trigger a fleet-level diversion. The tail risk (a US naval engagement, a major commercial-vessel casualty event, or a coordinated multi-vessel intercept) is materially higher than it was pre-MoU because the deterrent value of the agreement is now contested rather than assumed.
Theatre two: the proxy front
The GCC has presented evidence that recent attacks on Gulf states originated from Iraqi territory. Iraq is the theatre where an MoU between Washington and Tehran is hardest to enforce, because the relevant armed groups (the Iran-backed militias in the Popular Mobilisation Forces) are not parties to the agreement and have their own escalation calculus.
Prime Minister al-Zaidi's anti-corruption crackdown in the Green Zone, with dozens of politicians and officials arrested, matters here. It signals an attempt by Baghdad to assert the kind of state authority needed to hold up an MoU-style commitment. The simultaneous resistance from Iran-backed militias signals that the attempt is contested. Parliament is seeking a 2026 mini-budget of ID20 to 30 trillion ($15bn to $23bn) to keep operations running through the oil-export halt, an unusual financial arrangement that constrains Baghdad's room for political manoeuvre.
Lebanon is the second proxy theatre. The Lebanon, Israel and US trilateral framework was signed in Washington with provisions for partial IDF withdrawal from specific southern-Lebanon buffer zones. Hezbollah Secretary-General Naim Qassem declared the agreement "null and void" within hours; Parliament Speaker Berri, a Hezbollah ally, echoed the rejection. Within 48 hours, Israel resumed drone strikes in southern Lebanon and an IDF soldier was killed in a clash.
Both proxy theatres show the same pattern: a state-level diplomatic framework signed at the capital, then immediately contested by armed actors who are not signatories and have separate authority. The pattern itself is not new in the region. What is new is that it is happening alongside the maritime stress test.
Theatre three: the Iranian economy
The third theatre is internal. Point-to-point inflation in Iran reached 89% urban and 108% rural for the month of Khordad; food prices are up roughly 130% after import-subsidy cuts. The toman has weakened materially against the dollar.
Hard-currency pressure shapes the calculus on both sides of the MoU. Tehran has acute incentive to secure sanctions relief in any agreement, and that is the strongest force pulling it towards compliance. The same pressure makes the regime more sensitive to perceived domestic humiliation and less willing to tolerate visible US strikes. The two forces pull in opposite directions.
The historical pattern from the base-rate library on currency-crisis episodes is that regimes facing simultaneous external pressure and triple-digit point-to-point inflation either secure a stabilisation deal within six to nine months or face material domestic unrest. The current MoU is the closest thing to a stabilisation deal on offer. If it fails, the second-order risk picture (internal Iranian unrest, leadership signalling, possible succession dynamics) becomes the dominant frame within twelve months.
What we are watching
The Geneva signing ceremony itself is the first signal. Public Pakistani statements continue to point towards Geneva; Tehran has cancelled the immediate technical talks. The gap between those two facts is the gap between an MoU on a slow path to formalisation and an MoU that is failing in slow motion.
The second is whether maritime incidents progress from intercepts to engagements. Singapore-flagged vessel intercepts are bad. A US warship engagement with IRGC fast boats would be a different category of event with downstream effects on Gulf insurance markets and aviation routing within hours.
The third is whether Baghdad's anti-corruption crackdown produces actual prosecutions. The arrests are visible. The prosecutions are not yet visible. If the militia-aligned political figures detained in the Green Zone are released without charge, the implied Iraqi state capacity for any MoU-derived commitment is materially lower than the Washington framing assumes.
The Crisis Radar daily monitor tracks the Iran, Iraq, Pakistan, Lebanon and Israel indicators that feed each of these theatres.