A deal aimed at reopening the Strait of Hormuz and ending months of hostilities in the Middle East has been reached between the US and Iran, according to US President Donald Trump and Iranian officials.
Announced 14 June, the tentative peace deal, described by some as a “memorandum of understanding,” includes a commitment by the US to end its naval blockade of Iranian ports. The agreement is expected to be signed at a ceremony in Switzerland on Friday, 19 June.
US oil prices fell to around $80/bbl in early trading on Monday, 15 June, compared with nearly $85/bbl the previous Friday, in response to news of the deal. US oil prices, along with the European benchmark Brent crude, rose above $110/bbl at the peak of the conflict, forcing countries around the world to draw down their strategic petroleum reserves at a historic pace.
In a social media post confirming the agreement, Trump said, “The Deal with the Islamic Republic of Iran is now complete,” adding, “Let the oil flow!”
Pakistan’s Prime Minister Shehbaz Sharif, who has played a key role in the negotiations between the US and Iran, said on social media that the deal includes a “permanent termination of military operations on all fronts, including in Lebanon.”
Oslo-based Rystad Energy issued a research note following the announcement, indicating that the deal signaled a degree of alignment while underscoring the need for caution. The consultancy noted that the question of how Iran’s nuclear program will be addressed has been deferred to a 60‑day negotiation period, and that disputes over the timing and sequencing of other elements of the deal could emerge between the US and Iran.
“This deal, if it holds, is the most workable outcome available to all parties at the table, which gives it a degree of credibility,” Claudio Galimberti, chief economist for Rystad, said. “Washington has an incentive to avoid a spike in gasoline prices ahead of the midterms, while Tehran is seeking sanctions relief and restored export revenues, and the global economy has a strong interest in keeping the Strait of Hormuz open.”
Rystad also noted that Israel’s military operations in Lebanon remain a “persistent flashpoint” and that the resumption of pre-war trade flows and crude production in the region will not be immediate.
“It will take time for production to ramp back up, for logistics to normalize, and for the risk premium embedded in crude prices to dissipate, particularly given that the structural shift implied by the UAE’s exit from OPEC+ is not reversed by any near-term diplomatic outcome,” Galimberti said.
Israel, which joined the US in the air campaign against Iran that began on 28 February, is not included in the current agreement. Israeli officials speaking on 15 June indicated the country will act independently in its efforts to weaken or destroy Hezbollah.
Although the full text of the agreement has not been released, various media reports suggest it may include sanctions relief for Iran, with nearly half of its $24 billion in frozen funds potentially released during the ongoing negotiation period.
The release of funds is said to be contingent on Iran’s compliance.
US officials, including Trump, have also indicated they want a “toll-free” reopening of the Strait of Hormuz.
However, on 15 June, Iran’s foreign ministry spokesperson Esmail Baghaei said the country is seeking to charge a “service fee” for navigation services, environmental protection, and maritime insurance. Baghaei also stressed while speaking with reporters that Iran expects the war in Lebanon to cease as a part of its agreement with the US.