Iran said Monday it is working to finalize a joint statement with Oman on a plan to manage the transit of ships through the Strait of Hormuz, even as the 60-day negotiating period for a U.S.-Iran peace deal expired with no agreement in sight.

Iran-Oman Agreement Taking Shape

Iranian Foreign Affairs spokesperson Esmail Baghaei told reporters in Tehran that “an understanding has been reached regarding the map of the transit route.” Details that have previously emerged suggest the deal would reopen the strait with ships entering through a route close to Iran and exiting through a route close to Oman, with no fees or tolls charged during the interim period.

Baghaei conceded the talks with Oman have gone slowly, “but we had planned, and still plan, to finalize the understanding in the form of a package: the map plus a joint statement.” It remains unclear whether the deal will meet Washington’s criteria, as the U.S. has sought an acceptable agreement on opening the strait before ending its blockade of Iranian ports.

Iran effectively closed the strait — through which roughly one-fifth of the world’s traded oil supplies passed before the war — after Israel and the U.S. attacked the country on Feb. 28.

Iran Threatens “Fully Offensive” Posture

A senior Iranian official told Reuters on Monday that Tehran has decided to shift its policy from defensive to “fully offensive” due to the deadlock in efforts to agree a permanent end to the war. The official said Tehran would conduct a “timely and precise” military attack to break the U.S. naval blockade if diplomacy failed.

The warning came as Monday marked the day by which Iran and the United States were expected to reach a final deal under a memorandum of understanding signed on June 17. The MoU, which declared the immediate and permanent cessation of military operations, quickly unraveled due to a dispute over control of the Strait of Hormuz. Tehran said point 5 of the MoU gives it the right to manage the waterway, while Washington rejected that interpretation. President Donald Trump declared the pact “over” on July 7.

“The number one Goal is, and always will be, that Iran cannot have, in any way, shape, or form, a Nuclear Weapon,” Trump posted on Truth Social earlier Monday, repeating one of his stated rationales for the war.

Hard-Liners Prepare for Escalation

Iran’s hard-line leaders are preparing their forces to escalate the war and raise the costs for the U.S., sources told The Wall Street Journal. Iranian and Arab officials said Tehran’s hard-liners used the two months following the June memorandum to prepare for a larger confrontation rather than put their faith in diplomacy, viewing the agreement as a possible U.S. attempt to ease economic pressure and buy time before another attack.

The preparations include expanding the Islamic Revolutionary Guard Corps’ control over Iran’s regular military, installing battle-tested hard-liners in key security posts, strengthening domestic counterintelligence and ramping up missile and drone production. Tehran has also tightened its grip on the Strait of Hormuz while expanding the confrontation toward the Red Sea. Arab intelligence officials have detected communications between Iran and allied militias in Yemen and Iraq pointing to a strategic shift toward widening the war and inflicting greater costs on Washington.

“There is also a widespread view in Iran that the main war has not yet begun,” one Tehran-based defense analyst close to the Iranian government told the Journal. “What we have seen so far is increasingly interpreted through the lens of ‘salami-slicing’ tactics — limited, incremental escalation designed to weaken capabilities before a larger confrontation.”

Deadline Expires With No Deal

The June deal set an ambitious 60-day deadline for ending the war with Iran and reaching an accord on its nuclear program. Talks have focused on reopening the Strait of Hormuz and lifting a U.S. blockade on Iran, both of which were supposed to have happened under the interim deal. There has been no sign of any compromise on the strait, or that detailed nuclear talks have even begun.

The U.S., meanwhile, has no good options for getting out of the war it started alongside Israel. Acceding to Iran’s latest demands would mean giving it control over a critical international waterway — and would be tantamount to admitting defeat. Escalating the deeply unpopular war would further draw down U.S. supplies of advanced missile interceptors, jolt the world economy, and drive up gas prices ahead of U.S. congressional elections. So both sides have dug in, hoping the other will blink first. So far, neither has.

Pakistan, which played a key role in brokering the June agreement, noted last week that the deadline was Monday while expressing hope it would be extended. “We are not closing the chapter,” Foreign Ministry spokesman Tahir Andrabi said. “Pakistan is making all-out efforts to bring the two parties to the negotiating table.”