Iran, US agree to halt war and reopen Hormuz, sending oil prices tumbling

DUBAI/WASHINGTON – U.S. and Iranian officials said they have reached an agreement to end their war and reopen the Strait of Hormuz, a preliminary framework that sent oil prices lower but leaves the future of Tehran’s nuclear program to further negotiations.

Although still a draft accord, the deal marks the most significant breakthrough yet toward resolving a conflict that has killed thousands and disrupted global energy markets since it began with joint U.S.-Israeli strikes on Iran in February.

“The deal with the Islamic Republic of Iran is now complete,” U.S. President Donald Trump wrote on Truth Social at around 5:30 p.m. in Washington (2130 GMT) on Sunday. His post came shortly after Pakistani Prime Minister Shehbaz Sharif, whose country has acted as a mediator, announced that an agreement had been reached early Monday local time.

The memorandum of understanding is expected to be formally signed on Friday in Switzerland.

The precise terms of the agreement were not immediately disclosed. Sharif said in a post on X that the pact includes “the immediate and permanent termination of military operations on all fronts, including in Lebanon.”

Lebanon has been one of the main sticking points in negotiations, with Israel and Hezbollah continuing attacks despite calls from Trump and other international leaders to halt hostilities in recent weeks.

In a statement, Iran’s Supreme National Security Council said military operations on all fronts, including Lebanon, would end permanently starting Monday night.

Israeli Defense Minister Israel Katz said Israeli forces would remain in security zones in Lebanon, Syria, and Gaza indefinitely to protect Israel’s borders and settlements. He added that he and Prime Minister Benjamin Netanyahu had conveyed this position to Trump and other U.S. officials.

“If Iran attacks Israel due to events in Lebanon, we will respond with full force and clearly demonstrate the power gap,” Katz said.

Iranian Deputy Foreign Minister Kazem Gharibabadi said a broader agreement addressing the wider conflict would be negotiated during a 60-day ceasefire period, including potential sanctions relief for Tehran.

The future of Iran’s nuclear program—another major point of contention—is also expected to be addressed in later talks, according to sources familiar with the discussions.

STRAIT TO REOPEN

Trump said the Strait of Hormuz, a critical shipping route for global oil and gas supplies that Iran had effectively restricted for months, would reopen on Friday. He also said he had ordered an end to the U.S. blockade of Iranian ports.

“Ships of the world, start your engines. Let the oil flow!” Trump wrote.

Oil prices fell sharply on the news. Brent crude futures dropped about 4% in early trading on Monday, while Asian stock markets rose.

“The lack of detail, especially on freedom of shipping, is a concern, but not one that should constrain markets today,” said Sean Callow, senior FX analyst at ITC Markets.

European Union foreign policy chief Kaja Kallas called the announcement a “potential breakthrough” and said the EU would consider how it could contribute to the next phase of negotiations ahead of a meeting of EU foreign ministers in Brussels.

“From economic leverage to nuclear expertise and longstanding relationships with Gulf partners, the EU stands ready to contribute to a sustainable resolution,” Kallas wrote on X.

The war has become a political challenge for Trump and fellow Republicans, with public opinion polls showing frustration over rising fuel prices ahead of November’s midterm elections. At the same time, some members of Trump’s party have insisted that Iran’s nuclear program must be fully dismantled.

Republican Senator Lindsey Graham, a leading Iran hawk, praised the agreement but said he would closely monitor upcoming negotiations.

“Under our law, any nuclear deal with Iran will be sent to Congress for review and a vote,” he said. “Congratulations to all for getting us to this point.”

During his first term, Trump withdrew the United States from a 2015 multilateral nuclear agreement brokered under former President Barack Obama, which lifted sanctions on Iran in exchange for limits on its nuclear activities and international inspections.

Since then, Iran has expanded uranium enrichment, producing more than 400 kilograms of material close to weapons-grade purity.

RELEASE OF FROZEN ASSETS

The agreement was reached despite an Israeli strike in Lebanon on Sunday that drew criticism from both Iran and Trump.

Prime Minister Netanyahu has disagreed with U.S. calls to limit Israeli military operations in Lebanon to support diplomatic efforts with Iran. Israel has said it will maintain operational freedom in Lebanon, while Iran has made a full ceasefire in the country a key demand.

International leaders monitoring the conflict cautiously welcomed the announcement.

In a joint statement, Britain, France, Germany, and Italy said they were prepared to consider lifting sanctions on Iran in response to “clear, verifiable steps” limiting its nuclear program.

Before the deal was announced, a senior Iranian official told Reuters that the draft agreement included a U.S. commitment to release $25 billion in frozen Iranian assets. The Trump administration has previously said any unfreezing of funds would depend on Iran meeting specific conditions under a peace agreement.

A U.S. official, also speaking before the announcement, said the agreement would ultimately aim to dismantle Iran’s nuclear program, including the destruction and removal of its highly enriched uranium stockpile. The Iranian official said the draft would instead allow Iran to dilute enriched uranium domestically, as Tehran maintains it does not seek nuclear weapons.

-Reporting by Reuters bureaus; Writing by Lincoln Feast and Joseph Ax; Editing by Stephen Coates and Aidan Lewis