The United States and Iran have signed an initial agreement aimed at ending their conflict, with the deal immediately taking effect and triggering a cautious recovery in global markets as investors assess the impact on energy supplies and geopolitical stability.

The memorandum of understanding, signed by US President Donald Trump and Iranian President Masoud Pezeshkian, provides for an immediate halt to military operations, the reopening of the strategic Strait of Hormuz, and the beginning of negotiations toward a broader settlement.

The agreement also outlines a proposed $300 billion reconstruction framework for Iran and includes provisions for the United States to terminate sanctions, although key disputes — particularly Tehran’s nuclear programme — remain unresolved.

The nuclear issue will be negotiated over an initial 60-day period, which can be extended by mutual agreement.

Trump, who signed the document during the G7 summit in France, said the agreement was necessary to prevent a wider economic crisis.

“This would have become an economic catastrophe,” Trump told reporters, warning that the US could resume military action if a final agreement is not reached.

Iran confirmed that Pezeshkian signed the deal on Wednesday, but Iranian officials remained cautious about trusting Washington.

Iranian parliamentary speaker and senior negotiator Mohammad Bagher Ghalibaf said Tehran’s concerns about the US remained and warned that Iran was prepared to respond if negotiations failed.

“If the enemy does not understand the language of logic, we will enter again with the language of power,” he said.

Energy Markets Watch Strait of Hormuz Impact

The agreement has drawn immediate attention from global energy markets because the conflict disrupted one of the world’s most important oil and gas shipping routes.

The Strait of Hormuz, through which roughly one-fifth of global oil and liquefied natural gas supplies normally pass, faced restrictions during the conflict, contributing to higher energy prices and renewed inflation concerns.

Following news of the deal, oil prices eased.

Brent crude fell about 1% in early Asian trading to around $78.79 per barrel, although prices remained elevated compared with levels before the conflict began.

Under the agreement, ships will be allowed to pass through the Strait of Hormuz without charges for 60 days. However, Tehran indicated that future arrangements could change after the interim period.

Ghalibaf said the waterway would not simply return to the conditions that existed before the war.

Nuclear Deal Remains Biggest Challenge

The agreement states that Iran reaffirms it will not develop nuclear weapons, a key demand from Washington.

It also provides for Iran’s enriched uranium stockpile to be diluted under monitoring by the International Atomic Energy Agency (IAEA), reversing earlier US demands that the material be removed entirely from Iran.

However, a final resolution on Iran’s nuclear activities remains subject to further negotiations.

The deal comes after the US and Israel launched military operations against Iran on February 28, escalating tensions across the Middle East.

The conflict reportedly led to the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei and senior military figures, intensifying fears of a wider regional confrontation.

Political Backlash in Washington

The agreement has faced criticism from some US lawmakers who argue it does not adequately address Iran’s regional influence, missile programme, or support for allied militant groups.

Republican Senator Ted Cruz questioned the proposed reconstruction framework, arguing that providing financial relief to Tehran could strengthen a government hostile to Washington.

Democratic Senator Jeanne Shaheen also criticised the agreement, saying it failed to meet the objectives outlined by the Trump administration at the beginning of the conflict.

US officials, however, rejected claims that Washington would directly provide $300 billion to Iran, saying the reconstruction plan would involve international investment and approved projects rather than direct US funding.

Israel Tensions Threaten Fragile Truce

The agreement also includes a commitment to end military operations on all fronts, including Lebanon.

However, Israel has indicated it has no immediate plans to withdraw from Lebanon and continued operations against Hezbollah-linked targets, raising concerns that regional fighting could undermine the US-Iran deal.

Trump urged Israeli Prime Minister Benjamin Netanyahu to adopt a more cautious approach, warning that continued escalation could threaten the wider peace effort.

The agreement now moves into a critical negotiation phase, with markets, governments and investors closely watching whether Washington and Tehran can convert the temporary ceasefire into a lasting settlement.

Source:BBC