US and Iran reach deal to reopen Hormuz strait this week

The U.S. and Iran reached an interim peace agreement to reopen the Strait of Hormuz and move further toward ending a 15-week war that's wrought chaos across the Middle East and reverberated through the global economy.

The development caused equities and bonds to jump at the start of the week, while oil and natural gas prices - which soared with the strait's closure - slumped.

U.S. President Donald Trump, under pressure as rising fuel costs hit him and his Republican Party ahead of midterm elections in November, hailed a "great deal that will bring peace and security to the whole region." He had pushed for it to be announced on Sunday, his 80th birthday.

Yet for all the relief in markets and among Middle Eastern states that got caught up in the conflict, Washington and Tehran still need to decide on the final steps related to what they're calling a memorandum of understanding, set to be signed in Switzerland on Friday. Neither side has released a text.

Israel, which started the war alongside the U.S. by bombing Iran in late February, isn't in favor of the agreement.

Qatar, the main mediator along with Pakistan, will host U.S. and Iranian delegations this week to hammer out the details of the signing and plan for a new round of negotiations over Iran's nuclear program, according to several people familiar with the matter.

The 14-point plan should see the U.S. and Iran extend their ceasefire, agreed to on April 8, by two months. They will then begin the new negotiations about restricting Tehran's enrichment of uranium for around 15 years. They can extend the truce further if they can't reach a so-called "final agreement" in that timeframe, which many analysts expect will be the case given how complex and technical the discussions will need to be.

Immediately once the MOU is signed, Iran is meant to reopen the Hormuz strait and the U.S. should lift its blockade of Iranian ports.

Oil traders will watch closely on Friday and in the days after whether the signing actually leads to ships having free passage through Hormuz, which Iran effectively closed by firing on vessels when the war erupted.

Trump claimed on Monday that ships, "many loaded up with oil," are already moving through the strait along the southern route close to Oman, and that it is "totally safe, secure."

The interim deal specifies Tehran will allow vessels to transit free of charge for only 60 days, Iran's Fars news agency reported, citing a person familiar with the accord. Iran plans to generate revenue by charging for safety, navigation, environmental and insurance services after the 60-day period, according to Fars.

Iranian media also said ships passing through the strait would be regulated by Iran and Oman. Oman, which has close ties to Iran and the U.S., has said little beyond that it will abide by international law.

U.S. Vice President JD Vance said the White House would push for "toll-free" passage in the upcoming talks, and indicated that particular concession hasn't yet been made by Tehran.

"Our expectation is that the strait is going to be opened in a toll-free way for the long term, and that's the sort of thing that we're going to figure out in these technical negotiations," Vance said to CNBC.

The U.S., Europe and Gulf states such as Saudi Arabia and the United Arab Emirates have balked at the idea of Iran charging any fees for what most of the world views as international waters.

The MOU may refer to the chokepoint - through which one fifth of the world's oil and liquefied natural gas supplies normally flow - needing to be demined as a first step. The U.K. and France are set to lead a multilateral mine-clearing mission if it's needed.

Crude prices fell around 5% on Monday, with Brent futures trading at $83 a barrel. They're down from a high of around $125 in late April. Since then, traders have became more convinced there would be a deal rather than a reversion to all out war.

Oil is still up roughly 40% since the start of the year and the U.S. and other Western nations will need to rebuild their emergency stockpiles once the strait is open, having drawn them down at a record pace to try to cap prices.

Nearly 600 vessels are still stuck in the Persian Gulf awaiting departure through the strait, while hundreds more are waiting on the other side, according to data intelligence firm Kpler.

"It's far from certain that any peace will be lasting," wrote Bloomberg Economics analysts including Becca Wasser and Dina Esfandiary. "And even with a deal, any reopening of the strait will be fragile and take time."

High tension

U.S. government bond yields also dropped, with investors optimistic the waterway's opening will ease global inflationary pressures and perhaps ease pressure on the Federal Reserve to raise interest rates.

Several sticking points have caused the U.S.-Iran talks to drag on, with the sides continuing to exchange fire and the ceasefire close to breaking down over the past week.

The points of contention included whether the U.S. would agree to unfreeze tens of billions of dollars of frozen Iranian funds held in places such as Qatar, and whether Tehran will relinquish its stockpiles of high-enriched uranium. It's unclear how the MOU deals with those two issues.

Israel has not been directly involved in the negotiations and there's consternation in the country that the deal concedes too much to the Islamic Republic without curbing its development of ballistic missiles. Israelis also fear the accord will force Prime Minister Benjamin Netanyahu's government to ease its operations against the Iran-backed Hezbollah militant group in Lebanon.

Trump told Axios Israeli strikes on Lebanon's capital of Beirut around midday on Sunday - a response to Hezbollah firing projectiles into northern Israel - had delayed the signing. He claimed he swore at Netanyahu in a call soon after, telling the Israeli leader he had "no judgment" and had almost scuppered the negotiations.

Israel insists it won't be curtailed in fighting Hezbollah and stopping it launching attacks on its territory.

The announcement of an agreement came first from Pakistani Prime Minister Shehbaz Sharif, and was followed by Trump and Iranian state media.

Iran depicted the deal as a capitulation by the U.S.

"The Islamic Republic of Iran succeeded in thwarting the enemy in achieving its strategic goals," Deputy Foreign Minister Kazem Gharibabadi said. "The enemy was ultimately defeated and forced to request a ceasefire and negotiations. Now, all of Iran's main positions and demands have been taken into account in the text of the understanding."

Although Iran has been battered and several top officials have been killed during the war, its forces have caused chaos across the region. They've fired thousands of missiles and drones at Israel and U.S. allies such as Qatar and the United Arab Emirates.

Even as he celebrated the deal, Trump told the New York Times if an agreement on Iran's nuclear program isn't reached, he could restart military attacks.

The president has been frustrated by Iran's refusal to cave in to U.S. demands, with the conflict dominating his agenda and increasingly unpopular among Americans. He's vacillated in recent weeks between saying a deal is close and threatening to escalate strikes on the Islamic Republic.

Iran said during the 60 days of negotiations it would seek "the removal of all primary and secondary sanctions." Any such move may require approval from the U.S. Congress, which imposed some of the most punishing sanctions. It would likely provoke an outcry from Iran hawks who worry Trump will give up leverage over a country that's been seen as an enemy of Washington since just after its Islamic revolution in 1979.

A senior U.S. official who spoke to reporters on Friday said Iran would earn economic rewards each time it met a set of demands. The White House has stressed Iran won't get any money on the signing of the MOU.

The U.S. and Iran remain deeply distrustful of each other, and grave questions persist about their ability to reach a broader accord.

"Neither Iran nor the U.S. wants to return to hostilities," said the Bloomberg Economics analysts. "Still, the bar for reaching a final deal within 60 days is too high. Instead, all sides are likely to use any lull in hostilities to prepare for the next round of fighting."

-With assistance from Dana Khraiche and Catherine Lucey.

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This story was originally published June 15, 2026 at 8:24 AM.