The United States and Iran have reached a preliminary agreement aimed at ending their war, halting military operations and reopening the Strait of Hormuz, officials said, in a move that immediately affected global oil markets.
U.S. President Donald Trump said the agreement was complete, while Pakistani Prime Minister Shehbaz Sharif, whose country helped mediate the talks, announced that a deal had been reached.
The memorandum of understanding is scheduled to be officially signed on Friday in Switzerland. The full terms of the agreement were not immediately released.
Sharif said the pact called for the “immediate and permanent termination of military operations on all fronts, including in Lebanon.”
Iran’s Supreme National Security Council said fighting and military operations on all fronts would permanently end from Monday night.
Strait of Hormuz set to reopen
A key element of the agreement involves reopening the Strait of Hormuz, one of the world’s most important shipping routes for oil and gas supplies.
Trump said Iran would reopen the waterway on Friday and that he had ordered the end of the U.S. blockade of Iranian ports.
Oil prices dropped following the announcement, with Brent crude falling 4% and U.S. West Texas Intermediate declining more than 4.6% in early trading. Stock markets in Asia also moved higher.
The Strait of Hormuz had been effectively closed for months during the conflict, contributing to higher global energy prices.
Nuclear issue left for future negotiations
While the agreement addresses the immediate conflict, Iran’s nuclear program remains unresolved and will be discussed during later talks.
Iran’s deputy foreign minister, Kazem Gharibabadi, said a broader agreement would be negotiated during a 60-day ceasefire period, including possible sanctions relief.
The issue of Iran’s nuclear activities has remained one of the most difficult points in negotiations. Sources said future talks would address the program and the fate of Iran’s enriched uranium stockpile.
The United States has previously said any release of frozen Iranian assets would depend on Tehran meeting conditions under a peace agreement.
Deal reached despite regional tensions
The announcement came despite an Israeli strike on Lebanon on Sunday, which was criticized by both Iran and Trump.
Israel has said it was not part of the U.S.-Iran negotiations and has maintained that it will continue to act freely in Lebanon.
Trump said he updated Israeli Prime Minister Benjamin Netanyahu on progress toward the agreement during a phone call.
International leaders welcomed the announcement. The United Kingdom, Germany, France and Italy said they were prepared to lift sanctions on Iran if Tehran takes clear and verifiable steps to limit its nuclear program.
British Prime Minister Keir Starmer said freedom of navigation through the Strait of Hormuz must be restored, adding that Iran must not acquire a nuclear weapon.
What to watch next as the deal faces key tests
Despite the announcement of a preliminary agreement, several key issues that where also outlined by Wall Street Journal, will determine whether the deal moves forward.
The Strait of Hormuz will be a major indicator. U.S. President Donald Trump said the vital shipping route, which Iran had disrupted for months, would reopen once the agreement is formally signed on Friday. A return to normal shipping through the strait could have a major impact on global oil flows and trade, but the situation could still change before the signing.
The U.S. naval blockade on Iranian ships is another crucial point. Trump said he would lift the blockade as part of the agreement, a move that could reduce economic pressure on Iran and potentially encourage further negotiations with Washington.
Israel also remains a major factor. Israeli strikes in Lebanon have been one of the biggest challenges during the talks, with Iran describing them as a potential deal breaker. Trump has recently expressed frustration over Israel’s continued military actions, raising questions over whether Israel will now step back as the agreement moves ahead.
