The United States and Iran have signed an interim peace agreement that took effect Thursday, June 18, formally ending the three-month war that closed the Strait of Hormuz and drove oil above $100 a barrel. The accord marks the most consequential turn in the conflict since it began in late February, moving the Middle East from open warfare toward a negotiated reopening of the world’s most important oil chokepoint.
Presidents Trump and Masud Pezeshkian, with Vice President JD Vance and Iran’s parliament speaker and chief negotiator Mohammad Baqer Qalibaf, electronically signed the memorandum of understanding on June 15. President Trump signed on the sidelines of the G7 summit in France, and a formal signing ceremony is set to take place in Geneva on June 19. The International Atomic Energy Agency said it is ready to begin work implementing the agreement.
Under the 14-point framework, Iran agreed not to produce or acquire nuclear weapons and to dilute its enriched uranium stockpile, which the IAEA will verify. In return, the United States agreed to release $25 billion in frozen Iranian assets, contingent on compliance. U.S. officials emphasized that no cash has changed hands and that funds would flow only as Iran meets its obligations, pushing back on reports that billions had already been unfrozen merely for signing.
The centerpiece for energy markets is the reopening of the Strait of Hormuz. Under Article 5 of the agreement, Iran will use its best efforts to ensure the safe passage of commercial vessels free of charge for 60 days, in both directions between the Gulf and the Sea of Oman. Nearly 600 ships and some 20,000 seafarers had been stranded in Gulf waters during the closure, according to the International Chamber of Shipping. President Trump said the waterway would be fully open following the signing.
Analysts and maritime-security experts cautioned that a physical reopening will lag the diplomatic one. Clearing naval mines, restoring insurer confidence, restarting idled production fields, and repairing damaged energy infrastructure could take weeks. IEA Executive Director Fatih Birol welcomed the agreement and urged that the strait be reopened “without conditions” to restore confidence in global supply, while the agency warned the market could swing into a significant supply surplus by 2027 as disrupted Gulf barrels return.
The agreement’s durability faces an immediate test on the Lebanon front. Iranian Foreign Minister Abbas Araghchi warned that any Israeli attack on Lebanon, or occupation of Lebanese territory, would violate the U.S.-Iran agreement. Israel has said it will not withdraw from territory it seized in Lebanon during the conflict. That unresolved fault line is the clearest near-term path to a renewed risk premium, even as oil prices fall and pump prices drop below $4 for the first time since the war began.
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