Topline
Iran’s President Masoud Pezeshkian signed the interim peace agreement early on Thursday, hours after President Donald Trump did the same in Versailles after the end of the G7 Summit, in a deal that will take “immediate effect,” allowing for the Strait of Hormuz to be reopened while Iran is allowed to sell its oil without sanctions.
Key Facts
A copy of the memorandum of understanding (MoU) was first signed by President Donald Trump on Wednesday night during a dinner with French President Emmanuel Macron at the Palace of Versailles.
In a clip of the signing shared by Macron, Trump can be heard saying, “This was not easy.”
According to CNN, U.S. officials sent a photo of the copy signed by Trump to Iran, where it was then signed by Pezeshkian in Tehran, state media reported.
While sharing photos of the deal being signed, the state-run Islamic Republic News Agency said the MoU concludes the “imposed war waged by the US and the Israeli regime.”
The deal was initially set to be signed in Switzerland on Friday, but Pakistan Prime Minister Shehbaz Sharif—whose country helped mediate the deal—said it will “enter into force with immediate effect.”
In a lengthy statement, Sharif noted that the Strait of Hormuz will be “instantly” reopened and the U.S. will “immediately lift the naval blockade” of Iranian ports.
What Do We Know About The Details Of The Deal?
After days of questions about the deal’s text and criticism of its secretive nature, a U.S. official read out the details in a call with reporters late on Wednesday. Iranian state media also shared an outline of the MoU, which appears to align with the one read out by U.S. officials. The 14-point agreement begins by noting that the U.S. and Iran—along with its proxies and allies—declare an “immediate and permanent termination of military operations on all fronts,” including Lebanon. The MoU notes the final deal will confirm this permanent end to the war. The mention of Lebanon and a line about ensuring its “territorial integrity and sovereignty” appears to be a dismissal of Israel’s arguments that the Lebanon front should not be included in the deal. Both sides have agreed to respect each other’s “sovereignty and territorial integrity” and are committed to “negotiating and achieving the final deal in maximum 60 days, extendable with mutual consent.”
What Do We Know About Hormuz Passage?
The U.S. will end its naval blockade of Iran’s ports and the passage of vessels through the Strait of Hormuz—which carries 20% of global oil supplies—will be allowed to return to pre-war levels. As per the deal, Iran will be required to make arrangements for the passage of vessels and oil tankers through the Strait of Hormuz “with no charge for 60 days only.” It’s unclear if this means that Iran will be allowed to charge a passage fee or toll for Hormuz transit in the future. Iran is also required to remove technical and military obstacles for ship passages and carry out demining.
What About Sanctions Relief and Iranian Oil?
A major concession offered by the U.S. as per the deal is that Iran will be allowed to sell its oil freely in global markets once again. While the Trump administration will not lift sanctions on Iran, the deal notes that the Treasury Department will “issue waivers for the export of Iranian crude oil, petroleum products and derivatives, and all associated services, including banking transactions, insurances, transportation, etc.”
How Has The Oil Market Reacted?
The global benchmark Brent Crude Futures fell to $78.33 per barrel on Thursday, down from around $94 at the start of this month. The price still remains slightly elevated above the pre-war level of around $70 per barrel.
