U.S. officials told Axios on Wednesday, May 6, 2026, that Washington and Tehran were close to a one-page, 14-point memorandum of understanding that would end the war and establish a framework for further negotiations. The deal — if accepted by Iran — would lift restrictions in the Strait of Hormuz, with Iran committing to a moratorium on uranium enrichment in exchange for the United States lifting sanctions and releasing frozen Iranian funds.
By Friday, May 8, Secretary of State Marco Rubio said the United States expected Iran’s formal response that day. Reports indicate that Iran will deliver its response through Pakistan within two days. Pakistan has emerged as the primary back-channel mediator throughout the conflict, with PM Sharif and Field Marshal Munir maintaining open lines to both Washington and Tehran. Iranian Foreign Minister Abbas Araghchi traveled to Beijing on Tuesday May 5 as China continues to mediate U.S.-Iran negotiations in parallel.
Markets responded with the largest single-day move in years. Tuesday May 5, WTI crude crashed as much as 13.2% intraday to a low of $88.71 per barrel — the first sub-$90 print since April 21. Brent plummeted as much as 12% to a low of $96.77. Both benchmarks recovered partially through the rest of the week, with Friday closes of $95.42 (WTI) and $101.29 (Brent), but still finished the week down more than 6%. Traders now refer to the move as a “panic premium unwind.”
Defense Sec. Pete Hegseth said earlier in the week that the ceasefire is “currently effective.” Rubio said the offensive phase of military operations against Iran has “ended.” President Trump on Tuesday paused Project Freedom shipping operations to allow space for an agreement to be reached and signed, citing “significant progress” with Iranian representatives. The pause held until Friday, when U.S. forces disabled two Iranian oil tankers that attempted to evade the naval blockade — an action Trump described as “just a love tap” while reaffirming that the ceasefire remained in effect.
Not everyone in Tehran is on board. On Thursday, Mohsen Rezaei, a member of Iran’s Expediency Council, said via state news agency PressTV that the United States must pay reparations for damage done to Iran before any settlement. Tehran, Rezaei said, will not allow the U.S. to dictate terms unilaterally. The hardline framing has not derailed the technical talks but signals that any final deal will face internal Iranian political resistance similar to the friction within the U.S. side over War Powers compliance and sanction relief sequencing.
Wall Street has begun adjusting forecasts to a softer-but-not-soft trajectory. Goldman Sachs raised its Q4 2026 Brent forecast to $90 per barrel and WTI to $83. Barclays sees Brent holding near $100 even after a deal. The structural supply deficit limits any deeper pullback because GCC production capacity has sustained damage during the conflict, insurers remain reluctant to service tankers crossing the strait, and U.S. gasoline inventories have fallen for 12 consecutive weeks. A peace deal, when it arrives, will not flood markets with supply.
President Trump’s scheduled Beijing visit, originally delayed from April, hangs over the timeline. China has called for the Strait of Hormuz to be reopened given how much of its energy supply transits the waterway. Arriving in Beijing with the conflict resolved — or at minimum with a credible framework — would substantially strengthen Trump’s negotiating position with Xi Jinping. The next 72 hours will determine whether that timeline holds. For continuing coverage, see our geopolitics dashboard and Strait of Hormuz explainer.