A major breakthrough in the Gulf conflict emerged on Monday after U.S. President Donald Trump announced that the United States and Iran had signed a preliminary agreement aimed at ending months of fighting that has shaken the region and disrupted global energy markets.
The agreement would extend the fragile ceasefire first announced in April for another 60 days and pave the way for the reopening of the strategically vital Strait of Hormuz, a route responsible for transporting roughly one-fifth of the world’s oil supply.
Speaking after arriving in France for the G7 summit, Trump declared that the agreement had already been signed, adding that Vice President JD Vance would attend a formal signing ceremony in Geneva on Friday.
News of the agreement immediately rattled global markets, with oil prices falling to their lowest levels since March as investors reacted to expectations that energy supplies through the Strait of Hormuz could soon return to normal.
The conflict, which erupted following U.S. and Israeli strikes on Iran in February, has reportedly claimed more than 7,000 lives, primarily in Iran and Lebanon, while triggering widespread economic uncertainty across the globe.
Despite the announcement, many crucial details remain unclear. Iranian President Masoud Pezeshkian described the memorandum of understanding as an important step toward ending hostilities but stressed that negotiations for a permanent peace agreement have yet to be finalised.
Vance revealed that the memorandum spans only around one-and-a-half pages and serves as a broad framework rather than a comprehensive settlement. U.S. officials said further details are expected to be released within days, including provisions involving significant sanctions relief for Iran.
According to American and Iranian officials, the proposed package could eventually unlock substantial economic benefits for Tehran, including the lifting of sanctions, access to frozen foreign assets and a reconstruction fund reportedly worth up to US$300 billion, financed by Gulf nations hosting U.S. military bases.
However, Washington is expected to demand firm commitments from Iran, including a pledge never to develop nuclear weapons and an end to support for regional armed groups such as Hezbollah before those benefits are fully granted.
Several key issues remain unresolved. The future of Iran’s enriched uranium stockpile has not been determined, while disagreements persist over military activity in Lebanon. Iran is reportedly seeking a complete end to hostilities involving Hezbollah, whereas Israeli Prime Minister Benjamin Netanyahu has insisted Israeli forces will remain in southern Lebanon and retain the right to respond to any attacks.
Although reports indicate fighting in parts of Lebanon has eased since the announcement, violence has not entirely ceased. Lebanese media reported a deadly drone strike in southern Lebanon shortly after the deal was unveiled, underscoring the fragile nature of the situation.
Privately, some Israeli officials have reportedly expressed deep concerns over the agreement, with one senior official describing it as unfavourable to Israel’s interests.
While the preliminary deal marks the most significant diplomatic development since the conflict began, analysts say its success will ultimately depend on whether negotiators can resolve the complex political, military and nuclear issues that continue to divide the parties involved.
