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US and Iran Sign Ceasefire Agreement; Strait of Hormuz Reopens

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U.S. and Iran Sign Historic MOU to End Hostilities and Reopen Strait of Hormuz

"Both parties have declared an immediate and permanent end to military operations on all fronts, including in Lebanon."

The United States and Iran have signed a memorandum of understanding (MOU) to cease hostilities and reopen the Strait of Hormuz, a critical waterway for global oil shipments. The agreement, reached more than three months after armed conflict began on February 28, 2025, establishes a 60-day period for further negotiations on a permanent resolution.

Key Provisions of the Agreement

Cessation of Hostilities — Both parties have declared an immediate and permanent end to military operations on all fronts, including in Lebanon.

Strait of Hormuz — The U.S. has lifted its naval blockade of Iranian ports. Iran has agreed to allow oil tankers to transit the Strait of Hormuz safely, with no tolls for 60 days. Future administration of the waterway will be determined by Iran, Oman, and other Persian Gulf states.

Nuclear Program — Iran has reaffirmed its commitment not to develop nuclear weapons. The agreement requires Iran to dilute its stockpile of highly enriched uranium under international supervision. Iran has stated it will not ship its enriched uranium abroad.

Frozen Assets — A 60-day waiver has been issued allowing Iran to sell oil and petrochemical products. An agreement has been reached to release $12 billion in frozen Iranian assets. U.S. President Donald Trump stated the funds will be used to purchase U.S. agricultural products.

Sanctions — The U.S. has agreed to waive, but not eliminate, some sanctions. Further sanctions relief is contingent on Iran meeting benchmarks during the 60-day negotiation period.

Negotiation Timeline and Mediation

  • Pakistani Prime Minister Shehbaz Sharif, acting as a mediator, announced the initial agreement on social media.
  • The MOU was signed by U.S. President Donald Trump and Vice President JD Vance, and by Iranian President Masoud Pezeshkian. A formal signing ceremony was scheduled at the Bürgenstock resort in Switzerland.
  • Qatar also assisted in mediation. Iran, China, and Russia held diplomatic meetings leading up to the deal.
  • The MOU initiates a 60-day period for negotiations on a final agreement. Discussions will cover Iran's nuclear program, lifting of sanctions, Iran's reconstruction, and establishment of a monitoring mechanism.
  • Iran's missile programme and support for resistance groups have been removed from the negotiating agenda.

International Reactions

United Nations Secretary-General António Guterres welcomed the ceasefire and reopening of the Strait.

  • China: Welcomed the MOU and expressed hope for restoration of safe passage through the Strait.
  • European Union and Member States: France, Germany, the UK, Italy, and the EU welcomed the agreement and called for swift implementation. EU sanctions on Iran remain in place pending further discussions.
  • Russia: Welcomed the ceasefire agreement.
  • Japan: Welcomed the cessation of hostilities and urged steady implementation.
  • International Atomic Energy Agency (IAEA): Director-General Rafael Grossi stated that technical work will begin with U.S. and Iranian officials on Iran's nuclear programme.
  • Hezbollah: Chief Naim Qassem hailed the agreement as a victory.

Conflicting Interpretations and Unresolved Issues

Officials from the U.S. and Iran have offered differing accounts of specific terms:

Lebanon — Iranian Foreign Minister Abbas Araghchi stated the deal requires Israel to withdraw from Lebanon. A U.S. official, speaking anonymously, said the deal does not call for an Israeli withdrawal. Israeli Defense Minister Israel Katz stated that Israel will not withdraw from lands seized in Lebanon, Syria, and Gaza. Prime Minister Benjamin Netanyahu said Israel will remain in Lebanon "as long as necessary."

Nuclear Program — A U.S. official said the agreement will ultimately lead to dismantling Iran's nuclear program, with its highly enriched uranium stockpile to be destroyed and removed. A senior Iranian official said Iran could dilute its enriched uranium internally.

Reconstruction Fund — The pact may include a $300 billion rebuilding fund for Iran, conditional on meeting benchmarks.

Strait of Hormuz Operations — U.S. and allied forces are clearing mines placed by Iran. The U.S. Navy remains in the area to monitor compliance. The main shipping channel remains closed due to mines, though smaller routes have reopened.

Background to the Conflict

The war began on February 28, 2025, when the U.S. and Israel launched strikes against Iran. The U.S. cited Iran's nuclear program as the primary reason for initiating attacks. The Strait of Hormuz, through which approximately 20% of the world's oil passes, was effectively shut down by Iran shortly after the conflict began. The U.S. responded by blockading Iranian ports. A temporary ceasefire was brokered in early April 2025. Israel launched attacks on Beirut's southern suburbs during the negotiation period, which President Trump criticized as threatening the peace process.

Economic Impact

Oil prices, which spiked during the conflict, have been declining since the tentative deal was announced. Over 12.5 million barrels of oil transited the Strait of Hormuz on the night of the U.S. blockade lifting.