US President Donald Trump formally signed an interim peace deal with Iran at the Palace of Versailles on June 18, 2026, at the end of a Group of Seven summit. This agreement, a memorandum of understanding (MoU), shifts immediate focus to the planned reopening of the Strait of Hormuz and initiates a 60-day period for negotiations over Tehran’s nuclear program. The deal was mediated by Pakistani Prime Minister Shehbaz Sharif and entered into force with immediate effect, despite prior warnings from Trump about potentially restarting military campaigns.
The signing of the interim peace agreement led to a notable response in global markets. Oil prices fell, with Brent crude dropping 2.3% on Thursday, returning to levels seen 24 hours prior. This price movement was influenced by expectations of increased supply as the Strait of Hormuz, a crucial choke point for global oil and LNG flows that had been effectively blocked since February, is set to reopen. The blockade had caused an estimated daily shortfall of 14 million barrels in the global oil market, according to the International Energy Agency (IEA).
In contrast to oil, Asian stock markets rallied, shaking off overnight losses on Wall Street, due to renewed optimism for an end to nearly four months of disruption in global energy supply chains. However, market sentiment remains cautiously optimistic. While an LNG tanker is reportedly heading toward the Strait of Hormuz as a test case, concerns persist among shipping companies and analysts like Fabien Yip from IG due to practical issues such as a backlog of 500+ vessels and the need for mine-clearing operations. Jakob Larsen, chief safety and security officer at BIMCO, advised shipowners to continue thorough risk assessments given the lack of clear safety protocols for transit in the strait.
The agreement entails several immediate benefits for Iran, including the lifting of US naval blockades on Iranian ports and waivers on sanctions allowing Iran to freely sell its oil. It also promises at least $300 billion for Iran's rebuilding efforts, dependent on progress in further negotiations. The broader goal is a permanent end to hostilities and a return to pre-war traffic levels in the Strait of Hormuz within 30 days, though the path to full normalization of shipping and energy markets is expected to take weeks, months, or potentially years, according to industry officials.
