Expert Explains | What US-Iran negotiations mean for West Asia’s regional security, market stability

The US and Iran traded military strikes early Sunday (June 28) even as negotiations are under way between both countries to end the war in West Asia ongoing since February. These strikes — the latest in a series of flare-ups over the past week — have threatened to unravel a fragile truce that was put in place under a 14-point Memorandum of Understanding (MoU) signed earlier this month.

Ajay Singh, an energy and shipping executive based in Tokyo, spoke to The Indian Express about the prospects of the ongoing US-Iran negotiations, the significance of the MoU itself, and what this means for oil and gas markets, among other things.

What are the prospects for the negotiations?

Flare-ups may continue as the MoU has left crucial details unaddressed, such as arrangements for monitoring and enforcing the ceasefire in Lebanon, protocols for shipping in the Strait of Hormuz, and whether or not the International Atomic Energy Agency inspectors may access sites in Iran.

Some people on both sides may prefer that full-blown fighting resumes, and cause disruptions in Lebanon or the Strait of Hormuz as elections in Israel and the US draw closer. But the US and Iran will likely get on with negotiations because both realise that further conflict is not in their interests, at least for now.

Mutual mistrust and the complexity of the nuclear issue make it highly unlikely that a result will be forthcoming within 60 days — if at all — and extensions will be required. The best one may hope for is an outcome akin to the Joint Comprehensive Plan of Action (JCPOA) of 2015 (also known as the Iran nuclear deal) whereby Iran may pursue a peaceful nuclear programme under safeguards and secure a lasting end to sanctions, in return for the highly enriched uranium being rendered harmless.

Perhaps the US — although not Israel — may be amenable to such a deal, in light of the experience of the past 4 months, so long as it can be presented as an improvement over the JCPOA.

Frankly, this is an opportunity for Iran to make peace with dignity, secure the rightful future prosperity of its people, and end its decades-long ostracisation. The unknown is the internal dynamic within the Iranian regime at this time. It may well decide that the country’s only guarantee of security lies in continued conflict, or insist on a complete withdrawal of US forces from the Middle East. That would be an overreach.

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The situation after the US mid-term elections may not be quite as favourable for Iran; the military advantage that it has secured through the use of drones and missiles will eventually be countered, for that is the way the military offence-defence balance inevitably evolves; and in a no-holds-barred conflict, superior American economic and technological strength will prevail. Unfortunately, such a conflict would entail enormous economic pain and risk a wider conflagration.

What is the significance of the MoU?

The war brought the five-decades-long feud between Iran and the US and Israel to a head. It was a “make-or-break’ time for the Iranian regime — the most serious threat it has faced since the war with Iraq in the 1980s.

Quite objectively, one may say that Iran has pulled off something of a breakthrough. After decades of enduring tough sanctions, it has been able to restore its primary source of national income through oil export in addition to securing access to hitherto frozen funds besides another $300 billion of funding. It retains the military capabilities with which to continue menacing adversaries and choke off the Strait of Hormuz. Most extraordinarily, the US has recognised Iran’s claims over the Strait, without regard to the rest of the world.

US President Donald Trump signs a Memorandum of Understanding between Iran and the US at the Palace of Versailles, France, on June 17, 2026. Photo: Official White House Photo by Daniel Torok

The war stands as a rare instance, the first since the Suez war of 1956, in which a Middle Eastern nation has directly faced off with one of the world’s foremost military powers, stood its ground, and compelled the adversary to negotiate on balanced terms. That is a major boost to Iran’s position in the Islamic world and internally, it strengthens the hands of the Islamic Revolutionary Guard Corps (IRGC).

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British military intelligence expert Philip Ingram was quoted as saying that “Trump has not read the psychology of the Iranians well”. Is the psychological aspect relevant? What is the historical context?

Absolutely, the psychology of Iran’s ruling elite and their history are key to understanding and eventually resolving the conflict. The Iranian regime traces its very birth to a seminal anti-American event: the Revolution of 1979 that overthrew the then ruler Mohammed Reza Shah, who was reviled as the beneficiary of a US-instigated coup that had toppled Iran’s democratically elected Prime Minister Mohammad Mosaddegh in 1953. His proximity to the US — although well-intentioned — and his autocratic, modernizing ways were anathema to major sections of Iranian society.

Immediately after the Revolution, Iran found itself at war with Saddam Hussein’s Iraq, who it believed had invaded Iran at the instance of the US. The IRGC was born during this war as an ideologically-driven guerrilla force drawn from the people, fighting alongside regular Iranian armed forces.

It has waged war with the US and Israel through its proxies ever since, with the aim of tying them down in various parts of the Middle East to safeguard Iran’s security as it sees it. For example, through their Lebanese Shia militia Hezbollah, through their Quds Force in Iraq that bogged down occupying US forces after the 2003 invasion, in the Syrian civil war since 2010 and most recently through the Houthis in Yemen. This train of conflict has ingrained an ideology-driven mindset of “resistance” within the Iranian regime and a great part of the population. The IRGC is at the core of Iran’s power elite and is deeply entrenched across Iranian society not only as the military guardian of the Revolution but also as a key economic and political actor.

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The US’s military campaign seems to have been designed to overwhelm a conventional military force and a tottering regime fearful of its own citizens. But it found itself confronting a powerful security complex in firm control, driven by ideology and a guerrilla mindset, hardened by decades of war, defending its homeland and wielding a dispersed, well-hidden arsenal. Iran shrewdly identified the one major US vulnerability — domestic political damage due to economic pain — and exploited it by blockading the Strait of Hormuz.

Does Iran’s willingness to negotiate indicate the continuing influence of moderate elements who advocate peaceful resolution with the US?

Possibly, but it would be premature to conclude so. If anything, the IRGC must be well buoyed by its performance in the war. But the willingness to negotiate indicates pragmatism and the continued ability of Iran’s supreme leadership to mediate between moderate and belligerent factions.

Over the decades, there have been several attempts by elected Iranian presidents such as Akbar Rafsanjani, Mohammad Khatami, and Hassan Rouhani (whose government negotiated the JCPOA in 2015) to bring about a rapprochement with the West, motivated primarily by Iran’s economic interests, whenever permitted to do so by the late Supreme Leader Ali Khamenei. He maintained a political balance between the moderates and the advocates of resistance from the IRGC and the religious clergy. This political balance, overseen by the Supreme Leader, is a unique and enduring feature of Iran’s power structure, and its continuance would give hope of an eventual resolution.

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In terms of Iran’s hostility towards the Gulf Cooperation Council (GCC) countries through this war: is their alliance with the US the reason?

Partly, yes, the GCC countries being allies of the US and their having de facto made peace with Israel is a factor; the converse is also true, in that the US-GCC alliance is partly driven by wariness of Iran.

Iran sees itself as being quite distinct from the GCC countries as an ancient civilisational state, whereas the latter have been created relatively recently from Arab tribal societies — often by European colonialists. Iran’s Persian Shia identity has been intrinsic to its nationhood since a long time: for example, during the 16th-17th century Safavid empire, which safeguarded its independence from the neighbouring Sunni Mughal and Ottoman empires (the latter of course included many present-day Arab countries).

Moreover, Iran managed to stay relatively independent thereafter, resisting complete and prolonged subjugation, even as the Arabs came under European colonial rule. It drifted into and out of the clutches of the Russian and British empires in the 19th and early 20th centuries, and had a strong, self-made, modernising indigenous ruler in Reza Shah Pahlavi between 1921 and 1941 (he became Shah of Iran only in 1925, he was commander-in-chief before that).

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In the 1970s, Iran under Mohammed Reza Shah sought to assert itself as the premier power in the Middle East with the tacit support of the US until he was overthrown, followed by the war with Iraq. So, Iran has had this fraught history and consciousness that has not quite found a stable equilibrium with the wider world, including its regional neighbours. Iran’s support to Shia rulers or proxy groups such as in Syria, Lebanon, Iraq, and Yemen has brought it into conflict with other countries in the region, particularly Saudi Arabia and the United Arab Emirates.

GCC countries have been exceptionally restrained in their reaction to Iran’s attacks and its claims over the Strait of Hormuz but it is not a situation they can endure. We can expect major security-related initiatives from them, depending on how the negotiations progress.

What is the outlook for oil and gas supplies and prices? The markets seem to have proven the doomsday forecasts of oil prices at $150 a barrel wrong.

We need to keep important distinctions in mind. Price forecasts are logical determinations based on supply and demand projections, arising from likely scenarios apparent at the time. Economists, governments, and businesses use them to plan for what may come.

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Market prices — typically quoted for future delivery — on the other hand are based on sentiments of traders whose job is to match demand with supply, and make money. During the last four months, market prices have remained consistently below forecasts, indicating optimism which may, fortunately, be borne out. But optimism and pessimism are no substitutes for planning.

Oil prices could have easily gone in the opposite direction had there been no MoU and had the Strait of Hormuz remained closed for much longer. The world’s economy has had a close shave in terms of energy security. And we are by no means out of the woods yet. Oil prices have fallen back but do not represent a return to the pre-war situation.

Disruptions to negotiations and outbursts of fighting may cause volatility in the coming months. The power balance in the Persian Gulf stands fundamentally altered, reducing its reliability as an energy supplier. Changes in the energy policies of consuming nations will be needed.

Meanwhile, it would be wise to top off oil, liquefied petroleum gas, liquefied natural gas, and fertiliser stocks and expand reserves, taking advantage of reduced prices. Reserves cost money but insure against much worse economic damage and social unrest from physical scarcity.