Iran warns of offensive as US rejects extending ceasefire pact

Iran has warned it will shift to a fully offensive military posture, as efforts to negotiate a permanent end to the war with the United States have stalled. A senior Iranian official said Tehran is prepared to escalate tensions in the Strait of Hormuz and the wider region, and would conduct a timely and precise military attack to break the US naval blockade if diplomacy fails.

The warning comes as Washington has ruled out extending the temporary ceasefire agreement signed in June. That memorandum set a 60-day deadline for a broader deal on Iran's nuclear programme and sanctions, but it quickly unravelled over a dispute about control of the Strait of Hormuz, a vital waterway for global oil shipments.

In a glimmer of diplomacy, media reports indicate the Trump administration has opened back-channel discussions with the Islamic Revolutionary Guard Corps (IRGC). Reports say a message was delivered to IRGC commander General Ahmad Vahidi through an intermediary, with the administration concerned about whether Iranian negotiators actually spoke for the IRGC. Jared Kushner, the president's son-in-law and special envoy, said conversations between the US government and different areas of the Iranian government are probably more robust than ever before.

Meanwhile, President Trump has threatened to bomb Oman if it gets in the way of US interests. Iran has been negotiating a separate agreement on managing the strait with Oman and says they are close to a deal. Trump responded to those negotiations with a threat against the Gulf state, a longstanding US security partner.

Iranian officials are also worried that the threat of more economic punishment could increase hardships, reignite unrest, and further erode the Islamic Republic's legitimacy. Iran entered the war with high inflation, a weakening currency, and deep structural weaknesses, and now faces damaged infrastructure and disrupted trade.

The conflict has driven up global oil prices, with Brent crude settling above $90 a barrel on Monday. US gasoline prices have risen above $4 per gallon, up from less than $3 before the war, and Trump has warned Americans to prepare for continued high fuel prices.