US and Iran Sign Deal Reopening Strait of Hormuz After Months of War

The United States and Iran have digitally signed a 14-point interim memorandum of understanding amid ongoing Middle East tensions to end their war, reopen the Strait of Hormuz for oil traffic, waive sanctions on Iranian oil exports, and begin 60 days of negotiations on a final nuclear agreement. [5] The agreement immediately ends military operations on all fronts including Lebanon, removes the US naval blockade of Iranian ports within 30 days, and allows toll-free passage through the Strait of Hormuz for an initial 60 days. [1] Iran receives sanctions waivers on oil exports, unfreezing of assets, and a pledged $300 billion reconstruction fund from regional partners such as Gulf Arab nations, while reaffirming it will not develop nuclear weapons. [1] Negotiations will focus on Iran's nuclear program including the disposition of its highly enriched uranium stockpile, but issues such as ballistic missiles and support for regional proxies like Hezbollah are not addressed in the interim deal. [1] The pact has strained US-Israeli relations, with President Trump criticizing Israeli Prime Minister Benjamin Netanyahu over strikes in Beirut and ongoing operations in southern Lebanon that could jeopardize the agreement. [3] G7 leaders welcomed the deal at their summit in France but called for further negotiations to prevent Iran from obtaining a nuclear weapon, while oil prices initially fell on news of the reopened strait before partially rebounding. [3]

US and Iran Sign Interim Ceasefire Deal

US President Donald Trump and Iranian President Masoud Pezeshkian digitally signed the 14-point memorandum of understanding. [5] Trump signed the document during a meeting with French President Emmanuel Macron in Paris, while Pezeshkian also signed the agreement. [5] The pact entered into force immediately after both sides completed the digital signatures. [5] The memorandum declares the immediate and permanent termination of military operations on all fronts, including in Lebanon, and commits the parties not to initiate any new war or military operation against each other. [5] It also requires respect for each other’s sovereignty and territorial integrity while refraining from interference in internal affairs. [5] Both sides commit to negotiating and achieving a final deal within a maximum of 60 days, a period that may be extended with mutual consent. [5] The agreement came after the United States and Israel launched the war on Iran on February 28. [3] A senior US administration official described the memorandum as a mechanism to immediately reopen the Strait of Hormuz, address concerns surrounding Iran's enriched uranium stockpile, and create a pathway for economic engagement. [5]

Reopening the Strait of Hormuz

Upon signing the memorandum, the United States will begin removal of its naval blockade and any impediments against Iran, with the full end of the naval blockade required within 30 days. [5] During this period, traffic of vessels will be restored in proportion to pre-war numbers. [5] Iran will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only from the Persian Gulf to the Sea of Oman and vice versa. [5] The traffic of commercial vessels will start immediately, with technical and military obstacles and demining by Iran to be completed within 30 days. [5] Iran will conduct dialogue with the Sultanate of Oman to define the future administration and maritime services in the Strait of Hormuz in discussion with other Persian Gulf or littoral states. [5] Oil prices fell on prospects for the reopening of the Strait of Hormuz, with Brent crude futures below $80 at their lowest level since the opening salvos of the conflict, before later regaining more than 1 percent. [3] The closure of the strait, through which around a fifth of the world’s oil supplies must pass, had driven up global fuel prices and helped push US inflation to 4 percent. [1]

Economic Benefits for Iran

The deal immediately waives, but does not eliminate, sanctions that Trump imposed on Iran’s oil exports, allowing Iran to sell its crude on the world market again and restoring a revenue stream worth billions. [1] Last year Iran earned an estimated $45 billion from oil sales, though it had only one major buyer, China, and had to ship crude through a shadow fleet. [1] Under the blockade since April, its exports had nearly ground to a halt. [1] The draft agreement includes language on Iran’s highly enriched uranium, requiring it be downgraded on site at a “minimum.” [1] The interim pact promises a $300 billion fund for reconstruction of Iran’s war damage, with the mechanism for implementation to be finalized as part of a final deal within 60 days. [1] The United States undertakes with regional partners to develop this plan, and all required licenses, waivers, and permissions for relevant financial transactions will be granted. [5] The deal also promises to unfreeze billions of dollars worth of Iranian assets held abroad during the negotiations under a procedure the two sides will work out. [1] The United States further undertakes to terminate all types of sanctions against Iran, including United Nations Security Council resolutions and all unilateral US sanctions, primary and secondary, in an agreed-upon schedule as part of the final deal. [5]

Tensions Over Lebanon and US-Israeli Relations

The memorandum calls for an end to the war in Lebanon, where Israel has been fighting Hezbollah, and affirms a commitment to ensuring Lebanon’s territorial integrity. [1] Israel and Hezbollah are not parties to the agreement. [1] Israel has vowed to keep its troops in the zone it has occupied since March, while Hezbollah says it is committed to resisting Israel until full withdrawal is achieved. [1] Fighting in southern Lebanon has abated but not ceased since the agreement was reached on Sunday. [3] Israel, which was not part of the negotiations, says it retains the right to use force. [3] Trump has grown more scathing in his displeasure with Netanyahu, describing him as “crazy” at times and telling reporters that Netanyahu “has to be more responsible with respect to Lebanon.” [1] Trump said he was furious over Israel’s strikes in Beirut during the negotiations and warned they could jeopardize an agreement. [1] Netanyahu is left in a precarious situation ahead of national elections later this year. [1]

Reactions from G7 and Future Outlook

G7 leaders hailed the agreement at their summit in the French town of Evian-les-Bains but underlined the need for the negotiation to address the threats posed by Iran in the region and beyond and ensure that they never obtain a nuclear weapon. [3] Trump warned that the United States would bomb Iran if it violated the agreement, stating “We’re going to bomb the hell out of them if they violate the agreement.” [3] He added that if he did not like the outcome or if Iran did not behave, the United States would go right back to dropping bombs. [3] Trump also said the pact avoids the catastrophe economic that would have occurred if the conflict continued. [4] European leaders share US concerns about Iran’s nuclear program but never endorsed the decision to go to war without United Nations authorization. [3] Much depends on whether the two sides can reach a permanent deal within the 60-day period.

What to watch next: The two sides will now enter 60 days of negotiations focused on the disposition of Iran’s highly enriched uranium stockpile under International Atomic Energy Agency supervision, with the possibility of extending the period by mutual consent if needed to reach a final agreement.