The United States and Iran have agreed to a preliminary memorandum of understanding intended to end nearly four months of war, setting up a planned signing Friday in Switzerland while leaving major questions over enforcement, the Strait of Hormuz, Iran’s nuclear program and Israel’s role.
Markets moved quickly on the announcement: stocks surged Monday, while oil prices and bond yields fell. The reaction reflected hopes that a wider regional conflict and disruption around one of the world’s most important shipping routes could ease, even though the agreement has not yet been signed and its full text has not been released.
An agreement before a signature
President Donald Trump and Pakistani Prime Minister Shehbaz Sharif said Sunday that the U.S. and Iran had reached a deal. Iran’s Deputy Foreign Minister Kazem Gharibabadi later said the text had been finalized and would be signed Friday in Switzerland, Iranian state media reported. Qatari mediators also played a role, leaving Tehran after 17 hours of negotiations, with preparatory meetings planned in Doha before the signing.
For now, the arrangement is best understood as a framework rather than a final settlement. The U.S. and Iran have stood down militarily, and the memorandum would extend a ceasefire for 60 days to create space for negotiations over Iran’s nuclear program, sanctions and regional security. Gharibabadi has said nuclear talks could begin only if the U.S. releases billions of dollars in frozen Iranian funds; the U.S. dismissed that claim.
The central uncertainty is whether a signed document can produce a durable end to the conflict. “The threat of renewed conflict will remain in the coming months,” Torbjorn Soltvedt, principal Middle East analyst at Verisk Maplecroft, told CNBC, saying the hardest issues have been pushed into later negotiations.
Hormuz is central, but not fully settled
Trump has emphasized the Strait of Hormuz, saying the U.S. naval blockade would be lifted and that the waterway would reopen without tolls after the deal is signed. He later said the opening would occur upon Friday’s signing for mine removal. Defense Secretary Pete Hegseth said Sunday that the process of reopening the strait would begin immediately, though he described the terms as performance-based and said the U.S. expected Iran to stop shooting at commercial vessels once the deal is signed.
The strait is not officially open yet. Iranian state news agency Mehr reported that the reopening would be subject to “Iranian arrangements,” while Qatar welcomed the agreement as a step toward ensuring freedom of navigation. European leaders, including French President Emmanuel Macron and U.K. Prime Minister Keir Starmer, also urged swift implementation and a full restoration of maritime traffic.
Israel remains outside the deal
The largest political complication is that Israel is not a party to the U.S.-Iran agreement. The conflict has involved Lebanon, and Israeli strikes around Beirut have threatened to strain the emerging accord. Trump said “all sides should stand down” after Israel struck a Beirut suburb, while Israel said it was responding to a Hezbollah attack.
Israeli leaders have signaled they do not view the agreement as binding on Israel’s military posture. Israeli news service Ynet reported that Prime Minister Benjamin Netanyahu told Trump Israel would not withdraw from Lebanon and did not consider itself obligated to follow the Lebanon-related parts of the deal. Israeli Defense Minister Israel Katz said Israeli forces would remain in security zones in Lebanon, Gaza and Syria, and National Security Minister Itamar Ben-Gvir said Israel was not a partner to the agreement.
The Friday signing could clarify how much backing the framework has. Tehran has not released a list of attendees, and no official U.S. delegation has been confirmed. The presence of senior Iranian officials, or representatives from regional powers such as Saudi Arabia and the UAE, could signal broader support. Until the text is signed, Hormuz is reopened and the regional parties test the ceasefire, the breakthrough remains a diplomatic opening rather than a settled peace.
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