In the logical world that markets seem to believe will prevail in the Middle East, this war will end — and soon — because there’s little realistic prospect of either side winning a decisive victory by restarting the conflict. The costs of trying, meanwhile, range from punitive to ruinous.

In that world, there’s even a road that might, in time, make sense of the lives and resources lost since February 28. Both Israel and Lebanon, and the US and Iran, are, after all, in direct talks with each other. That development could be used to put both sets of relationships on a path to levels of security and stability they haven’t seen for decades.

In fact, so compelling are the arguments in favour of a lasting ceasefire and settlement process that this still seems the only reasonable scenario for ending the war, even if getting there should prove messy and plagued by false starts.

The trouble is we do not appear to live in that kind of logical world right now. Nor do we have the Henry Kissinger-esque strategic brains trust on hand to craft the grand bargains required, or a set of leaders with the personal and political courage needed for compromise — the kind displayed by Egypt’s Anwar Sadat in making peace with Israel in 1979, or by Yitzhak Rabin when he signed the 1993-1995 Oslo Accords with the Palestinian Liberation Organization.

Instead, we have a divided leadership in Tehran, with the guns and power sadly in the wrong hands. The last word on what terms to accept does not rest with the men the US is negotiating with — Parliament Speaker Mohammad-Bagher Ghalibaf and Foreign Minister Abbas Araghchi — or even with a supreme leader. It is the Islamic Revolutionary Guard Corps generals in control of the nation’s missiles and security forces who call the shots.

In Lebanon, Israel’s prime minister, Binyamin Netanyahu, agreed to accept a temporary ceasefire and begin talks with the Government in Beirut only under duress. The pressure came from US president Donald Trump, who saw Israeli actions against Hezbollah as undermining his efforts to end the war with Iran.

Unfortunately, that effort does not make Trump the adult in the room. When it comes to Iran, he seems to live in his own movie, reinventing reality to follow a script in which he plays the tough and ultimately triumphant hero, never mind the facts.

This is an inherently unstable situation, as the weekend’s chaos in the Strait of Hormuz testifies. No sooner had Araghchi declared Hormuz “completely open” for as long as there was a ceasefire in Lebanon, than it all began to unravel.

Trump said the US blockade of ships going to and from Iranian ports would continue. A report in The Wall Street Journal suggested the US was also about to expand its blockade to international waters, boarding ships carrying Iranian oil wherever they’re found around the globe.

In Trump’s telling, negotiations were going great and would restart on Monday. As of yesterday, talks had not yet begun. Trump said a deal could be clinched within days and there are just a few niggles to resolve. Meanwhile, “regime change” in Iran has been accomplished; the radicals are dead and a new group of reasonable leaders are in charge, all but begging to sign his dotted line. Iran even agreed to hand over its enriched uranium. The US, for its part, is standing tough, maintaining its blockade and maximum demands, while offering nothing — including money — in exchange.

None of this is real. It’s the script of Trump’s imaginary Dirty Harry sequel. There has been no regime change in Iran. As the Washington-based Institute for the Study of War wrote in its Saturday analysis of the conflict, “Islamic Revolutionary Guards Corps Commander Major-General Ahmad Vahidi and members of his inner circle have likely secured at least temporary control over not only Iran’s military response in this conflict but also Iran’s negotiating position and approach within the past 48 hours.” These men are as hardline as they come.

Araghchi’s social-media post about opening Hormuz drew a furious backlash from other leaders at home as it became clear the US was not reciprocating, an affront they felt was compounded by Trump’s nuclear claims. So the IRGC warned against trying to cross Hormuz without its consent, and fired on two vessels to make the message clear.

Ghalibaf — himself a former IRGC commander — said Trump had made seven statements about their agreement on social media, all of which were untrue. Hormuz would remain closed until the US also ended its blockade, he said.

The reality is that there is no nuclear deal and the two sides remain far apart. Radicals remain in charge of the Islamic Republic. It’s even possible that a settlement will be harder to reach now than had former Supreme Leader Ali Khamenei not been killed on the first day of the war, because there is no single decision-maker in Tehran to whom even the IRGC must bow. Khamenei’s son and successor, Mojtaba, appears to have been so incapacitated in the airstrike against his father that he has been unable even to make a video to show he’s alive.

Meanwhile, the Gerald Ford aircraft carrier is steaming back towards the Gulf after undergoing repairs and Trump has threatened to resume bombing Iran after the ten-day truce expires this week. On the other side, US intelligence services reportedly believe that Iran has been digging out missiles and launchers that were buried under rubble by US and Israeli bombing. As a result, The New York Times report says, the US now believes Iran’s missile and missile launcher stocks are back up to 70 per cent and 60 per cent of prewar levels respectively.

The base-case scenario for this war remains that somehow, surely, the two sides will find a way back to the negotiating table and a settlement, because both have so much to lose and so little to gain should the war resume in earnest. That would be a safe bet in a world of logic. But in our current “real” world — the one dominated by an interplay of Trumpian and IRGC fantasies of victory — a return to war looks all too possible.

• Marc Champion is a Bloomberg Opinion columnist covering Europe, Russia and the Middle East. He was previously Istanbul bureau chief for The Wall Street Journal