US President Donald Trump and Iranian President Masoud Pezeshkian have signed a memorandum of understanding (MoU) to end the war between their nations. This initial agreement, signed during the G7 summit in France, includes the immediate and permanent termination of military operations on all fronts, including in Lebanon. It also stipulates the reopening of the Strait of Hormuz, a critical waterway through which approximately 20% of the world's oil and liquefied natural gas (LNG) typically passes, with no charges for vessels for 60 days. The US has also committed to ending its naval blockade of Iranian ports and terminating all types of sanctions on Iran.
The MoU outlines a 60-day period, extendable by mutual consent, for the US and Iran to negotiate a final deal, particularly concerning Iran's nuclear program. A key point of the agreement is Iran's reaffirmation that it will not procure or develop nuclear weapons. Regarding its existing enriched uranium, the deal specifies it will be "down-blended" (diluted) on-site under the supervision of the IAEA. While the US initially demanded complete removal of nuclear material, this diluted on-site approach is a compromise.
The agreement also includes a $300 billion plan for Iran's "reconstruction and economic development." US officials have clarified that the US is not required to contribute financially to this fund. The deal is described as "performance-based," meaning Iran will benefit only if it adheres to its commitments. The signing of this deal led to a drop in oil prices, with Brent crude futures falling approximately 5%, and a jump in stock markets, as it brought relief to global energy markets which had seen prices spike due to the closure of the Strait of Hormuz. The initial agreement is expected to be followed by further talks on aspects such as the future management of the Strait of Hormuz and potentially the release of frozen Iranian assets.
