The US and Iran are close to formally signing an interim peace deal, referred to as a memorandum of understanding, which is expected to provide substantial financial relief to Iran. A near-final draft indicates that Iran will receive sanctions waivers allowing immediate oil sales. Further financial incentives, such as the release of frozen assets, would be deferred. This agreement is seen by both sides as a victory, though some energy insiders are skeptical about the speed at which the Strait of Hormuz can be fully reopened.
According to the draft, the US Treasury Department would issue waivers for exports of Iranian crude oil, petrochemical products, and related derivatives immediately after the memorandum's signing. The US naval blockade on Iranian ports would also be lifted, and efforts made to restore traffic through the Strait of Hormuz within 30 days. US Vice President J.D. Vance stated that these incentives are tied to Iran's performance in adhering to the deal, which was digitally signed by both sides on Sunday.
A crucial component of the deal is the potential establishment of a $300 billion investment fund for Iran, financed by regional Gulf states, to support its economic development. This move aims to bypass the optics of directly releasing Iran's frozen funds, estimated to be over $100 billion. However, Iranian sources have reported that the 14-point draft memorandum specifically provides for the release of $24 billion in frozen Iranian assets. Furthermore, the deal entails the return of International Atomic Energy Agency (IAEA) experts to Iran to ensure compliance, including the destruction of its enriched uranium stockpile.
The memorandum extends an existing ceasefire arrangement for another 60 days, during which further negotiations on Iran's nuclear program and other issues will take place. Iranian Foreign Minister Abbas Araghchi acknowledged the economic benefits but stressed that Tehran would not solely rely on them, citing a history of unfulfilled promises from the US. During this 60-day period, discussions will focus on the lifting of US sanctions and Iran's nuclear program.
While the deal's formal signing is anticipated on Friday, June 19, possibly in Geneva, fundamental questions remain unanswered, particularly regarding full implementation and security. The US has agreed not to impose new sanctions during the negotiation period and to waive oil sanctions for a specified time. President Trump has highlighted the reopening of the Strait of Hormuz as a significant win for global energy prices. However, shippers are cautious, with some estimating it could take weeks or even a month for confidence to return and traffic to fully resume.
