US and Iran Sign 60-Day Ceasefire Deal to Reopen Strait of Hormuz

The 110-day conflict that choked the global energy supply has reached a fragile pause. US President Donald Trump and Iranian President Masoud Pezeshkian have digitally signed a 14-point memorandum of understanding, effectively extending a temporary ceasefire and initiating a 60-day window for comprehensive peace negotiations.[1][5]

The agreement, signed by Trump during a dinner with French President Emmanuel Macron at the Palace of Versailles, marks a dramatic diplomatic pivot. After months of military exchanges that began in late February, the US administration has shifted from a posture of maximum pressure to one of negotiated de-escalation, driven largely by the mounting toll on the global economy.[2][6]

At the center of the memorandum is the immediate reopening of the Strait of Hormuz. The waterway, which previously handled a fifth of the world's oil and natural gas, had been effectively closed by Iranian mining and a retaliatory US naval blockade, paralyzing international shipping.[3][8]

Under the terms of the agreement, the US will lift its naval blockade, and Iran will clear the strait of mines, allowing toll-free commercial passage for the next 60 days. In exchange, the US Treasury Department will issue immediate waivers for Iranian crude oil exports and associated banking services.[5][8]

The economic mechanism of the deal is designed to act as a pressure release valve for global markets. The conflict had sent Brent crude prices soaring, renewing inflationary pressures worldwide and threatening to push vulnerable economies into a recession.[6]

The immediate market reaction has been one of cautious relief. Oil prices dropped sharply following the announcement, though energy experts warn that it will take months for shipping logistics to fully normalize and for energy companies to meet global demand.[6]

Central banks have been closely monitoring the geopolitical fallout. The Bank of England, for instance, opted to hold its benchmark interest rate at 3.75%, explicitly citing the inflationary risks posed by the Iran conflict and the closure of the Strait of Hormuz as primary factors in their decision.[4]

Beyond the economic relief, the memorandum outlines a complex framework for addressing Iran's nuclear program. Iran has agreed to halt its military operations and "maintain the status quo" of its nuclear infrastructure during the 60-day negotiation period.[8]

Crucially, the deal requires Iran to begin "down-blending" its estimated 440-kilogram stockpile of highly enriched uranium. This process dilutes weapons-grade material into a lower-enriched form suitable only for civilian energy production, neutralizing the immediate threat of a nuclear breakout.[8]

The International Atomic Energy Agency (IAEA) will oversee this technical process on-site. IAEA Director General Rafael Grossi welcomed the agreement, noting that the agency's indispensable role is recognized in the text. "It is good that the memorandum is there," Grossi stated. "Now the technical work starts."[3][7]

Despite the diplomatic breakthrough, the agreement faces intense skepticism and structural vulnerabilities. The most immediate wildcard is the ongoing conflict in Lebanon, which threatens to drag the region back into war.[8]

While the US-Iran memorandum calls for a permanent end to military operations on all fronts, including by Iranian allies like Hezbollah, Israel is not a signatory to the pact. Israeli officials have signaled they will not withdraw from land seized in Lebanon and will continue their offensive against Hezbollah, a stance that could easily unravel the broader ceasefire.[8]

In Washington, the deal has provoked fierce blowback from security hawks and Republican allies of the administration. Critics argue that the agreement rewards Iranian aggression by unfreezing billions in assets and providing sanctions relief without permanently dismantling Tehran's nuclear infrastructure.[6][8]

The memorandum also floats the creation of a $300 billion reconstruction fund for Iran, financed by regional partners in the Gulf, contingent on a final peace settlement. This provision has fueled further domestic criticism that the US is facilitating a massive financial windfall for a hostile state.[2][8]

For the US administration, the calculus ultimately came down to global economic stability. Trump explicitly noted that continued military escalation "could have caused an international depression," framing the concessions as a necessary trade-off to restore the flow of energy and prevent a worldwide financial crisis.[6]

The clock is now ticking on the 60-day window. Mediators from Pakistan and Qatar are preparing to facilitate technical talks in Geneva, aiming to translate the 14-point memorandum into a binding, long-term treaty. Whether this pause leads to a lasting peace or merely serves as a tactical delay remains the central uncertainty of the crisis.[3][5]