Ongoing military tensions from the 2026 Iran conflict, which erupted in late February with US-Iran exchanges and subsequent strikes, continue to preclude any restoration of formal diplomatic relations. A fragile ceasefire remains under pressure after recent rejections of Iranian proposals on the Strait of Hormuz blockade, sanctions relief, and nuclear limits, with indirect talks through Pakistani mediators focused solely on de-escalation. The United States maintains maximum-pressure sanctions on Iranian oil exports and relies on Switzerland as its protecting power in Tehran, without any announced steps toward embassy reopening. These structural barriers, rooted in the absence of ties since 1979, underpin the strong trader consensus against normalization occurring this year.