Trump's Iran deal kicks in as focus shifts to Hormuz flows

U.S. President Donald Trump’s interim peace deal with Iran is starting to take effect, with focus shifting to the resumption of shipping through the Strait of Hormuz and a complex 60-day negotiating period over Tehran’s nuclear program.

Trump signed the so-called memorandum of understanding at the Palace of Versailles near Paris on Wednesday evening, at the end of a Group of Seven summit. He was flanked by world and business leaders, including French President Emmanuel Macron and Blackstone Inc. Chief Executive Officer Steve Schwarzman, who applauded as he did so.

“Oil is flowing,” Trump posted on Truth Social on Thursday, emphasizing why he has been so keen to end a war with Iran he started alongside Israel at the end of February. The conflict and Iran’s closure of the critical waterway caused energy prices to soar, heightening the risk of a global economic crisis, and led to chaos across the Middle East.

Those concerns led Trump to accept an agreement many Iran hawks in the U.S., as well as Israel, say concedes far too much to the Islamic Republic in terms of sanctions relief and potentially unfreezing tens of billions of dollars of funds. Many say it looks no better than the Obama administration’s 2015 nuclear deal that the U.S. leader calls the “worst deal ever.”

“History teaches us giving billions of dollars to theocratic lunatics who want to murder us is not a good idea,” said Senator Ted Cruz, a Texas Republican who is normally supportive of Trump’s policies.

Ships carrying stranded oil began making their way out of the Strait of Hormuz on Thursday, while Kuwait said it will start ramping up production, as the peace deal sparked a flurry of activity in the region. Vessels carrying nearly 10 million barrels of oil have either appeared outside the strait or are sailing through, including the first Saudi-owned tankers since the war began more than three months ago.

Iran said commercial vessel traffic at southern ports had returned to normal since Monday, according to the semi-official Iranian Students’ News Agency.

Many shipping and oil executives had previously said they need more clarity, including on whether the strait is clear of mines and whether they need to seek any kind of permission from Iran before sailing through.

Iran will arrange passage of commercial ships through the strait with “no charge for 60 days only,” according to a copy of the memorandum of understanding published by Iran’s President Masoud Pezeshkian on X on Thursday. Traffic “will be instated within 30 days,” taking into account technical and military obstacles and the removal of mines by Iran, according to the memorandum.

Iran will hold talks with Oman to define the future administration and maritime services of the Strait of Hormuz, which will be in line with “applicable international law and the sovereign rights of coastal states” of the Persian Gulf, according to the agreement.

The U.S., Europe and Gulf Arab states have balked at the idea of Iran charging a toll for what’s widely considered international waters.

Oil fell further on Thursday, with Brent dropping 1.1% to $78.48 a barrel as of 12:16 p.m. in London. It’s down from close to $95 since Trump said late last week that a deal was imminent.

Still, oil remains roughly 30% higher for the year, with energy traders saying it will take months, if not longer, for volumes of oil and liquefied natural gas going through Hormuz to return to normal.

U.S. Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf, Iran’s lead negotiator, are scheduled to meet in Switzerland on Friday for a ceremony to mark the signing and start a further round of negotiations to permanently end the war.

The memorandum extends a U.S.-Iran ceasefire that began in April by 60 days. During that time, the sides will try to agree restrictions on Tehran’s nuclear program and how to dilute or destroy its stocks of highly enriched uranium. Many nuclear experts say 60 days is too little to negotiate something so complex and technical, and the agreement says the timeframe can be extended.

The 2015 nuclear deal, which Trump derided and abandoned during his first term, took about two years to finalize.

Israel and the U.S. said the conflict was necessary to prevent Iran acquiring atomic weapons. The Islamic Republic has always denied wanting to do that, though it has raised the suspicions of many governments by enriching uranium far beyond the levels needed for nuclear power plants.

While Iran’s economy has been battered by the war and some of its most senior leaders killed, its ruling regime remains entrenched. The Iranian military proved able to inflict plenty of damage on the U.S. and allies such as the United Arab Emirates by firing thousands of drones and missiles across the region.

Iran’s closure of the Strait of Hormuz by firing on several ships weakened Trump’s position. As gasoline prices jumped in the U.S., the war became more and more unpopular among Americans and caused the polling numbers of Trump and his Republican Party to drop ahead of midterm elections in November.

U.S. gasoline prices dipped below $4 a gallon for the first time since March after the memorandum was agreed.

Trump faced pressure, too, from European allies and Gulf states such as Qatar, the UAE and Saudi Arabia to strike a deal with Iran.

Iran will be allowed to restart oil exports immediately under the memorandum, with the U.S. granting sanctions waivers. Tehran will also potentially benefit from a $300 billion rehabilitation fund that the U.S. and regional allies are meant to set up. The U.S. has said it won’t provide any money but that other countries are free to.

The document says the U.S. could unfreeze Iranian funds held in various countries, albeit only if Tehran meets certain criteria.

The upcoming negotiations will likely be tense as Trump comes under increasing pressure from Republicans who say he should “finish the job” with the Islamic Republic, an adversary of the U.S. since its birth with the 1979 Iranian revolution.

“My concerns about the MOU, now that we’ve seen it, have to do with the fact that there’s no mention of verifiably dismantling the nuclear weapons program,” Mike Pence, Trump’s first term vice president, told Bloomberg Government.