Most Western analysts were loath to concede the tale told by the images out of Tehran on the night of June 7. Thousands of Iranians crowded into the Enghelab Square Revolution Square waving the flags of the Islamic Republic and Hezbollah and chanting at Majid Mousavi, the commander of the aerospace forces of the Revolutionary Guards, to hit Tel Aviv on that very night. It is broadcast on state television. Press TV aired the video around the world. And within hours, the missiles were in the air again.

But to dismiss these crowds as merely "acted" or as a reflection of the "government theatre" is to miss the point. Two months after its US-Israeli bombing campaign that was intended to fracture the Islamic Republic from within and was believed to have killed Supreme Leader Ali Khamenei, a version of Iran remains in existence. Still firing. Plus, in its own words, it's still winning.

That is the dirty little secret at the center of this war a war that was begun on Feb. 28 with clear objectives of regime change and the dismantling of Iran's nuclear and ballistic missile programs and which was concluded, after a first round, on April 8 with none of those being met.

In what ways did the Truce turn into a trap?

As far as anyone can tell, the ceasefire of 8 April was an Iranian strategic triumph. Trump made the announcement on social media, and markets responded with euphoria oil dropped 16.5 percent, S&P 500 futures rose by more than 2 percent and investors around the world breathed a sigh of relief. However, the fundamental issues were completely left untouched under the cover of the relief rally. The Strait of Hormuz's future, Iranian funds and its nuclear program were all three suspended as contingencies of a conditional truce. The deal was more of a truce than a peace.

The 33-kilometre waterway between Oman and Iran that connects the Persian Gulf to the world's energy markets the Strait of Hormuz had been turned into Iran's strongest economic weapon. It transports approximately one-fifth of the world's oil shipments and its closure by Iran caused prices to soar and Asia, Europe and the Americas to reel. A closure of the Hormuz would not simply send prices soaring, but would send them shooting into the stratosphere on fear alone, exacerbating inflation, contracting financial conditions and driving economies to the brink of recession in weeks, according to Ali Vaez of the International Crisis Group.

That was an accurate analysis. Brent crude rose 8 percent, from $71.32 a barrel on Feb. 27, to $77.24 on March 2, the two trading days bracketing the initial U.S.-Israeli strikes. Then it went up again. After two weeks of the conflict, oil had surpassed $103 per barrel while US sanctions hit Kharg Island, the hub of 90 percent of Iran's crude exports, and Trump threatened to destroy all oil facilities if Hormuz remained closed. The price of gasoline in the United States surpassed $4 per gallon for the first time in years.

Bad News, the Ceasefire That Wasn't

The truce of April 8 did provide some respite, but the structure of the war was unchanged. The negotiators from the two countries had reached a memorandum of understanding that seemed to extend the ceasefire agreement and launch negotiations over Iran's nuclear program for 60 days, but Trump had to sign off on the deal, and terms of the deal had been disputed. Tehran has agreed to open Hormuz to prewar levels of traffic under Iranian and Omani supervision, Iran's state television said. The White House called that a "complete fabrication" and Trump declared outright that no country would be in control of shipping through the strait.

The semantic difference of those two positions was huge. In reality, Middle East leaders already knew that Iran had, in essence, control of Hormuz, whatever an agreement might stipulate in principle, as Amos Hochstein, a former Biden energy advisor, admitted. That perception was in itself a huge market force.

There was a gradual decline between April and early June. Talks broke down on the issue of Iran's nuclear enrichment. The US continues to counter-blockade Iranian ports for use by ships. US officials had feared Iran was testing warning drones in the vicinity of the strait, against both commercial vessels and US forces, and Trump told NBC that Iran still had between 21 and 22 percent of its arsenal from before its war era, but this was a downsized arsenal that was still operationally significant.

The June 7 Trigger

On June 7, events leading to the renewed open fighting were similar to those that have occurred many times in this war. Hezbollah launched rockets towards northern Israel. In response, Israel attacked the Dahiyeh district of Beirut, which is home to Hezbollah facilities. Iran, which considers attacks on Hezbollah as attacks on its axis of resistance, fired missiles for the first time in two months at Israel in response.

Israel then retaliated that same night, attacking military fuel and air defence facilities in western and central Iran. On Monday morning, Iran and Yemen's Houthi rebels fired more rounds. A new round of escalation had begun by the time that people were gathering in Enghelab square.

Brent crude went up to $96.05 a barrel as the exchanges were ratcheting up, while one outlet quoted an Iranian official involved in nuclear discussions as saying that reaching an agreement with Trump was "no longer feasible at this stage. Tel Aviv stocks exchange fell. The shekel dipped against the dollar. OPEC+ agreed to a 188,000 b/d increase in targets from July, the fourth in three tries to compensate for the supply shock, after it had already authorized three monthly increases since the Hormuz closure.

The Iranian home-made calculator.

It is important to read the Tehran rally in a more nuanced way than that which is offered by state propaganda or western dismissal. In 2026, Iran was already weakened by years of sanctions, destabilising protests, the toll of the 12-day war with Israel in June 2025 and the weakened position of its regional proxies before the first U.S.-Israeli strike was made.

But the regime still hasn't toppled. The revolutionary state's mobilising power remains undamaged, whether based on feelings of patriotism, the party's ability to distribute favours, or the use of force. The chants in Enghelab Square had a message: It is the IRGC's aerospace command that is now the real source of power. Mousavi, whom the throng was chanting to "strike the devil," is an institutional survivor of a military force that has outlasted its political masters.

It is a huge issue for any attempt to predict the negotiated endgame. During the U.S.-Israeli bombing campaign against Iran in late February, both Washington and Jerusalem thought that the Islamic Republic would collapse swiftly. But the military superiority was not enough to dispatch the smaller, weaker opponent a trend that's more common than you think. The IRGC is now the state. Any nuclear deal, any Hormuz agreement, any post-war settlement must be one with which the IRGC can live domestically and that is a very different set of constraints than negotiating with a civilian foreign ministry.

The More Things Change the More Things Stay the Same.

Forget the geopolitical mumbo-jumbo, and just examine the figures. In fact, the conflict has already had an impact in the global economy which will not be quickly undone by a ceasefire. Oil and gas facilities in Iran are damaged. Even if the Strait is reopened, it will take some time to see a full recovery of global energy markets due to damage to the oil refineries and other Middle East infrastructure. The cost of insurance for shipping in the Gulf is still high. Routes have been switched around the Cape of Good Hope, lengthening routes and increasing costs for tankers.

Since February, a crisis in the Strait of Hormuz has damaged at least 17 merchant ships, captured two and killed or missing 12 seafarers, a development for which there is no obvious historical equivalent in the modern era of globalised energy trade. The EU, which took this week the first steps to sanction Iranian officials and an IRGC unit for their involvement in the Hormuz blockade, is using new legal tools specifically developed for the crisis.

The economic situation in Iran is disastrous. Inflation has already been high prior to February. The rial has lost even more value. The conflict has forced over 3.2 million Iranians to flee their homes, and the nation's main oil export facilities on Kharg Island have been attacked several times. The World Cup is on now and even the excitement about that has waned this week, according to a report by The Times of Israel, due to war and economic misfortune.

The weakness of Trump's Strategy

Washington went into this war with a theory: Iran was so weak that it would crack under the combined pressure of the Israeli-American military forces, and a new nuclear deal could be achieved on Washington's terms. That theory hasn't led to the promised results, and now the US stance has become a tad murky.

The renewed missile exchanges, Trump told Fox News, "certainly not going to help negotiations. He made a public statement yesterday night, urging Netanyahu not to attack Iran following Sunday night's salvo of missiles. But then Israel struck, as one report put it, Netanyahu "pseudo-agreeing" to Trump's demand before doing what it pleased anyway. Both sides agreed to a ceasefire on Monday afternoon under strong pressure from the United States. At the same time, Jerusalem authorities pledged to keep fighting Hezbollah in the south of Lebanon, and they made it clear that the battlefront is far from over.

Washington's basic issue is structural. The US is looking for a nuclear deal that permanently limits Iranian enrichment; post-war Hormuz arrangements to ensure free navigation outside Tehran's jurisdiction; and some resolution of frozen assets. Iran's demands include sanctions relief, recognition as a regional power, and security guarantees for the survival of the regime. Those posts are still worlds apart, and each time the missiles are fired, it becomes a little more difficult to get back to the negotiating table.

The Morning After

Israel and Iran announced Monday evening that they will cease hostilities on Monday, and Tuesday, and Wednesday, and Thursday, and a tentative, Trump-brokered truce that on Monday has uncanny parallels to the one that was agreed on April 8. The reactions in the markets have been as expected. Oil is down a little from its intraday highs. The shekel is holding its own.

But underlying conditions are the same as those that led to the escalation on June 7. Hezbollah continues to shoot from Lebanon. IDF continues to bomb Beirut. Iran continues to keep the command of the IRGC's aerospace forces as its main means of deterrence. And in Tehran, the crowds that gathered in Enghelab Square have gone home for now but they know where the square is.

What should have been a three-month war is now in its fourth month. The supposed-to-be-fallen regime is still mobilising their streets. And the world economy continues to take the hit for a war that has yet to have a specifically credible conclusion.