‘We Told You So’: Israel Watches the Iran Ceasefire Unravel

Iran Signed the Deal and Read It as an American Surrender. Israel Warned the Gap Would Surface — and Now It Has

The last seventy-two hours have seen a clear fracture in the ceasefire between the United States and Iran.

It began with Iranian attacks on oil tankers that, as far as the Islamic Republic was concerned, had strayed from the corridor it had allocated to them in the Strait of Hormuz.

It continued with the U.S. military striking dozens of targets inside Iran in response, and with the Iranians signaling that they no longer intend to permit the free movement through Hormuz that existed before this war.

Then, last night, the United States struck Iran again — President Trump describing the Iranians as, in his words, a "sick people," saying he no longer wants to deal with them, while at the same time making clear he is not eager to return to war.

What is really happening?

1. Iran, and much of the region, sees the Islamic Republic emerging from this war stronger, not weaker.

As far as Tehran is concerned, it never signed anything guaranteeing free movement through Hormuz or a return to the prewar status quo. Indeed, the MoU contains no sentence restoring business as usual in the strait, no guarantee of complete freedom of maritime passage. What it does say is that Iran and Oman will establish some set of arrangements for passage — though it stipulates that no fees will be levied. For the first time in its modern history, this hands Iran genuine leverage over the Strait of Hormuz. And as far as the Iranians are concerned, they are not about to let it go.

They are further emboldened by what they read as American weakness — specifically, by the political moment in which this administration finds itself heading into the midterms. They listened carefully to President Trump's own explanations for why he chose the agreement: the quotes that surfaced from Paris, in which he raised the specter of another global depression, a 1929 scenario.

Tehran drew its conclusion — that now is the moment to ensure none of the agreement's achievements are eroded. And so it keeps attacking ships and vessels across Hormuz, pressing, testing, reinstating its position.

The funeral of the supreme leader, Ali Khamenei, was itself a testament to Iran's standing — delegations arriving from across the Gulf and the wider world, including countries like Saudi Arabia that the Islamic Republic had attacked during the war. So it is not only rational calculation at work here, but the ideological sentiment of a fundementalist-revolutionary regime burying its supreme leader and determined to prove the war was not fought in vain.

Khamenei and his family members lying in state

2. Among Israeli officials, the sentiment — one senior source told me as much last night — comes down to four words: we told you so.

The Israelis regarded the MoU from the outset as a flawed document, one that left deep ambiguity on a range of issues — the nuclear question among them, but also the Strait of Hormuz. They understood the advantage it conferred on the Iranians.

They also insisted that the two sides walked away with entirely different expectations of what the MoU actually was. The Iranians genuinely saw the agreement as Washington waving a white flag — an American acknowledgment that the war had been a disaster. Anyone listening to the President, or to his MAGA base, understands that this is not the case.

The Israeli position on negotiating with Iran was, and remains, unchanged: no plausible agreement is reachable unless the Iranians face simultaneous political, economic, and military pressure.

It was the recommendation of Israel's defense establishment not to halt the war during the ceasefire and MOU negotiations — to keep hitting the Iranians, and to hit them hard, so they would grasp that this was not a retreat, and certainly not a surrender. The Iranians, for their part, read the end of the war through the lens of a North-South Vietnam scenario, or an Afghanistan-style withdrawal. They still fail to grasp what Hormuz and the nuclear file materially mean to the West.

What surprises Israeli sources most is the audacity of the Iranians — continuing to attack ships and court escalation given the dire state of their economy. Western intelligence assessments describe conditions in Iran as worsening, and to date the sanctions relief has not meaningfully kicked in. Thirty-six hours ago the U.S. administration announced it was restoring the sanctions banning sale of Iranian oil.

Contrary to what is sometimes assumed, Israel does not want the agreement to collapse outright — not now. Both the government and IDF do not want a return to a full-blown war, including ballistic missiles falling on Israeli cities.

Much of this has to do with the coming elections, and with the perception that a renewed war would be read as a failure of the Netanyahu government — not because Netanyahu was responsible for the MoU, but because he led Israel into this conflict in the first place. A war that, according to most regional analysts, has thus far failed to sufficiently damage the Islamic Republic's standing — and in some respects has even strengthened it, as the behavior of its proxies in Gaza and Lebanon makes plain.

Hezbollah and Hamas are emboldened now, pressing new demands in the war's aftermath, pointing out that their patron was not broken — not by the region's most powerful military, Israel, nor by the world's foremost superpower, the United States.

Senior Israeli sources believe that the war will not resume at full scale, but that this tension will persist and drag on. They also caution that the Islamic Republic's conduct has turned mercurial in the extreme — that Tehran may now believe it has trapped the Trump administration into a kind of submission. A misreading, for anyone who actually knows this administration. But with Iran, these sources concede, much is lost in translation.

3. This could become an ongoing conflict-

what the Israelis sometimes call the war between the wars. If this scenario develops, the United States and Iran will deal each other blows, try to maintain some understanding, and then do it all over again - for months or more. The general result, in terms of global energy and the safety of passage in the Gulf, would be negative, detrimental.

Participants holding #KILLTRUMP banners during the funeral procession in Tehran on 7 July 2026. Source: wikipedia

One instrument the Iranians hold and have not yet used is their ability to press the Houthis to close another strait — the passage into the Red Sea at the Bab el-Mandab. That option remains available to them as a means of escalation, alongside a range of others, including further activation of their proxies in Lebanon.

The Iranians view the Lebanon agreement — brokered between Israel and the Lebanese government under American auspices and mediation — as a betrayal of the MoU. What they see is the Americans working, once again, to alienate and marginalize Hezbollah.

For now, Hezbollah is abiding by the Israel-Lebanon ceasefire, trying to demonstrate that Israel is not retreating from Lebanese land even when the organization refrains from killing or attacking Israelis. But the relative calm can change with a single order from Tehran.

Part of the crisis flows from Iran’s own internal struggles. Tehran is not only playing a strategic regional game; it is also caught in a contest between factions across the regime — within the IRGC, within the circle around the new and younger Khamenei, and within the more civil-society-oriented wing of the Islamic Republic that has developed over the years.

Layered onto that is a conviction, held by some of these factions, that no agreement with the United States should be accepted at all — that now is precisely the moment for Iran to demonstrate its power in the region. It is a recipe for more miscalculation and more instability, in the near future.