U.S. and Iran Near Ceasefire Agreement to Reopen Strait of Hormuz

In a dramatic reversal that could halt a devastating three-month war, U.S. President Donald Trump has called off planned airstrikes against Iran and announced the near-completion of a "great settlement" to end the conflict. The diplomatic breakthrough, which Trump suggested could be signed as early as this weekend in Europe, aims to immediately reopen the Strait of Hormuz and establish a 60-day ceasefire.[2][4][6]

The proposed Memorandum of Understanding (MOU) outlines a multi-step de-escalation process. According to U.S. officials and regional diplomats, the core terms require Iran to lift its blockade on the vital maritime chokepoint without imposing transit tolls, while the United States would simultaneously ease its naval blockade on Iranian ports. During the 60-day pause in hostilities, negotiators would work toward a comprehensive treaty addressing Iran's nuclear program and broader regional security.[1][7]

Despite the optimism radiating from the White House, Tehran has projected a notably more cautious stance. Iranian Foreign Ministry spokesperson Esmaeil Baghaei confirmed that large portions of the text have been finalized through Qatari and Pakistani mediation, but he stressed that Iran will not compromise on its "red lines." Baghaei stated that the government has not reached a final conclusion on the matter, noting that the draft is still under review by Iran's supreme decision-making bodies.[3][5]

The mere prospect of a resolution sent immediate ripples through the global economy. The Strait of Hormuz is the transit point for roughly 20% of the world's seaborne crude oil and liquefied natural gas. News of the impending ceasefire caused global energy prices to tumble from their recent wartime highs, while U.S. equities rallied, with the S&P 500 jumping 1.3% in Thursday afternoon trading.[3][4][6]

The conflict, which erupted in late February 2026 following a U.S. and Israeli aerial campaign, has severely disrupted global supply chains. In retaliation for the strikes, Iran's Islamic Revolutionary Guard Corps effectively closed the Strait, attacking merchant vessels and laying sea mines. The resulting bottleneck stranded over 150 ships, triggered a global fuel crisis, and forced shipping insurers to hike premiums exponentially.[3][4]

The diplomatic pivot came with whiplash-inducing speed. Just hours before announcing the MOU, Trump had publicly threatened to hit Iran "very hard" and floated the unprecedented step of seizing Kharg Island, Iran's primary oil export terminal, to assume total control of its energy markets. By Thursday afternoon, however, the administration had entirely changed course, citing significant progress in back-channel talks.[2][7]

A central pillar of the U.S. negotiating posture involves Iran's nuclear capabilities. Trump claimed on Thursday that the agreement ensures Iran's highly enriched uranium will be "destroyed" and that the country will never possess a nuclear weapon. However, diplomats familiar with the text indicate that the MOU merely establishes a framework to address the uranium stockpile, with binding nuclear constraints relegated to a second, more detailed accord to be negotiated during the 60-day window.[1][4][6]

For Tehran, the primary incentive is massive economic relief. The draft agreement reportedly paves the way for Iran to freely sell its oil on the global market and could unfreeze up to $25 billion in Iranian assets held overseas, contingent upon strict compliance with the ceasefire terms. Iranian hardliners, however, remain deeply suspicious of U.S. promises, pointing to Washington's previous withdrawal from the 2015 nuclear deal.[1][3]

The diplomatic heavy lifting has been largely facilitated by Qatar and Pakistan. Qatari envoy Ali Al-Thawadi and Iranian Foreign Minister Abbas Araghchi reportedly spent Wednesday in Tehran narrowing the final gaps regarding the sequencing of sanctions relief and the mechanics of reopening the waterway. Both mediating nations have urged Washington to formalize the ceasefire to prevent accidental escalations.[3][6]

The ripple effects of the MOU extend beyond the Persian Gulf. According to the draft text, the 60-day ceasefire would also apply to the parallel conflict in Lebanon, temporarily halting the intense fighting between Israel and Iran-backed Hezbollah militants. This broader regional pause is viewed as a critical component for securing buy-in from neighboring Arab states.[1][4]

Israeli leadership has expressed cautious appreciation for the developments. Following a phone call with Trump, Prime Minister Benjamin Netanyahu's office released a statement clarifying that while Israel is not a party to the MOU, it supports the U.S. commitment to eventually dismantle Iran's enrichment infrastructure and limit its ballistic missile production.[6]

Despite the diplomatic momentum, the reality on the water remains highly volatile. Early Friday morning, U.S. Central Command reported that American forces shot down two Iranian one-way attack drones attempting to strike commercial ships transiting the Strait. While the U.S. maintains that some commercial traffic is still flowing, the skirmishes underscore the fragility of the current situation.[2][3]

Domestically, the proposed deal has triggered immediate pushback from U.S. Republican hawks, who had spent years advocating for decisive military action against Tehran. Critics argue that the terms of the MOU—particularly the unfreezing of assets and the reliance on future negotiations for nuclear limits—bear an uncomfortable resemblance to the Obama-era agreements they previously dismantled.[3]

In Iran, domestic messaging is similarly fraught. State-aligned media outlets, including the Fars News Agency, have pushed back against Trump's narrative, insisting that the Strait of Hormuz will remain under sovereign Iranian control—a direct contradiction of Washington's demand for an internationally open waterway.[3]

If the political hurdles can be cleared, the logistical challenges of implementation are immense. The agreement requires a coordinated timeline for demining the Strait, establishing verification mechanisms for the ceasefire, and safely navigating the backlog of anchored oil tankers through the narrow channel without triggering further incidents.[3]

The coming days will determine whether the three-month crisis ends in a historic diplomatic settlement or spirals back into open warfare. While Vice President JD Vance is reportedly preparing to travel to Europe for a potential signing ceremony, the ultimate fate of the MOU rests on whether Iran's Supreme Leader, Ayatollah Ali Khamenei, grants his final approval.[2][4][5]