US-Iran ceasefire holds, but Middle East remains on edge as Trump hosts Netanyahu

Fresh diplomatic efforts to revive talks between the United States and Iran have gained momentum after both sides paused military strikes, offering a rare opportunity for de-escalation following nearly two weeks of intense conflict. However, fresh attacks by Iran-backed groups and high-level diplomatic meetings this week highlight how fragile the situation remains.

Regional officials reportedly said mediators led by Qatar and Pakistan have made "significant" progress in trying to bring Washington and Tehran back to the negotiating table. Their immediate objective is to restore an interim ceasefire that collapsed after the latest round of military exchanges.

Ceasefire holds

The pause in hostilities has now entered its third day, with neither the US nor Iran reporting fresh attacks. The recent conflict began after Iran targeted vessels transiting the Strait of Hormuz, prompting US strikes on Iranian coastal infrastructure. Tehran responded with missile and drone attacks on countries hosting American troops, killing US service members in Jordan and Iraq.

Also read: US pauses strikes on Iran; is a breakthrough in peace talks likely?

US President Donald Trump said Iran had sought further discussions following the latest escalation. "We're having good talks, so we'll see what happens," Trump told reporters aboard Air Force One. "I think there's a good chance that something could happen."

Iran, however, has denied holding direct negotiations. Foreign Ministry spokesperson Esmail Baghaei said mediators may be passing messages between the two countries but insisted there were no direct talks.

Strait of Hormuz in focus

One of the key issues under discussion is the future management of the Strait of Hormuz, through which nearly a fifth of the world's oil supply passes.

According to regional officials, Oman has proposed a joint regional mechanism to oversee shipping through the strategic waterway instead of allowing Iran to exercise unilateral control. The proposal is reportedly modelled on the Strait of Malacca, where countries voluntarily contribute towards navigation safety and maritime security.

While Tehran has argued that an interim agreement allows it to regulate shipping and potentially levy transit fees, Washington has opposed any arrangement that would give Iran greater control over the vital energy corridor. The US military said its naval blockade remains in force, adding that it had redirected 17 commercial vessels and boarded two others.

Attacks continue across the region

Although direct US-Iran strikes have paused, violence in the Middle East region has continued.

Also read: US carries out strikes on Iran as both sides threaten civilian infrastructure

Saudi Arabia said it intercepted drones launched by Iran-backed militias in Iraq targeting petroleum facilities, while Yemen's Houthi rebels separately claimed attacks on Saudi oil infrastructure. Jordan also reported shooting down two drones, and separate drone strikes targeted an Iranian Kurdish dissident group in Iraq. No casualties were reported in those incidents.

Iran has also accused Ukraine of attacking one of its vessels in the Caspian Sea over the weekend, claiming one sailor was killed. The episode has added another layer of complexity to the regional crisis given Tehran's close ties with Russia.

Trump-Netanyahu meeting in focus

The diplomatic push comes as Israeli Prime Minister Benjamin Netanyahu arrived in Washington ahead of a crucial meeting with President Trump at the White House on Tuesday (July 28).

Iran's nuclear programme is expected to dominate the discussions, alongside the US-backed framework agreement between Israel and Lebanon, the situation in Gaza and the expansion of the Abraham Accords.

The meeting comes at a politically sensitive time for both leaders. Netanyahu faces domestic political pressure ahead of elections, while Trump is under increasing pressure to avoid another prolonged Middle East conflict before November's midterm elections.

Also read: Bahrain activates air raid sirens as US ends 13th night of strikes on Iran

Trump acknowledged there were some differences with Israel over Iran but suggested both countries remained broadly aligned. "We have a little difference, but pretty close," he said.

Oil prices ease

The conflict has also raised concerns about US military stockpiles, with analysts warning that weeks of sustained operations have depleted key missile and interceptor inventories. While Trump insisted American stockpiles remain "in very good shape," he admitted he would like to have larger reserves.

Financial markets, meanwhile, have responded positively to the diplomatic thaw. According to shipping data from Kpler, vessel traffic through the Bab el-Mandeb Strait has begun recovering, while movement through the Strait of Hormuz remains subdued but stable.

Brent crude has fallen more than 9 per cent over the past week, reflecting investor optimism that diplomacy could avert another major disruption to global energy supplies.