Oil prices fell on Thursday after the United States and Iran signed a memorandum of understanding aimed at ending months of conflict in the Middle East. A formal ceremony is scheduled for Friday in Switzerland to mark the start of a 60-day negotiation period.
The agreement follows months of hostilities that began after US-Israeli strikes on Iran in February, a conflict that destabilized the region, disrupted global trade routes, and contributed to volatility in international energy markets.
The signing was confirmed by both Washington and Tehran on Wednesday. US President Donald Trump signed the document after attending the G7 summit in France, according to a video shared by one of his aides. Iranian Foreign Ministry spokesman Esmaeil Baqaei, quoted by state news agency IRNA, also confirmed that the memorandum had been finalized and signed by the presidents of both countries.
Iran's chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, described the agreement as evidence of a US "failure," while maintaining that Tehran had secured important concessions. The agreement is expected to take effect immediately.
According to Pakistan's Prime Minister Shehbaz Sharif, who announced details of the deal on social media platform X, Iran will reopen the Strait of Hormuz immediately, while the United States will lift its naval blockade as part of the initial implementation measures. Sharif also said Pakistan, with support from Qatar, would host a ceremony in Switzerland on Friday to commemorate the agreement and launch technical-level negotiations between the parties.
Global oil markets reacted positively to the development. Brent crude, the international benchmark, fell by more than two percent on Thursday, extending losses recorded since news of the agreement first emerged over the weekend. As of 0525 GMT, Brent North Sea crude was trading at $77.87 per barrel.
Under the terms of the memorandum, Iran has agreed to dilute its stockpile of enriched uranium under the supervision of the United Nations. A US official described the commitment as a significant achievement for Washington. Iranian officials have repeatedly stated that discussions on broader nuclear issues would only take place after the signing of the initial agreement and during the subsequent negotiation period.
The deal also permits Iran to resume oil exports. In addition, all sanctions imposed on Tehran could be lifted if the two sides successfully conclude a final agreement at the end of the 60-day negotiation process. Iran may also gain access to a proposed $300 billion reconstruction fund, although US officials have clarified that Washington is not obligated to contribute financially to the initiative.
Despite the agreement, Tehran has reiterated plans to impose fees on vessels transiting the Strait of Hormuz after the 60-day period expires. Ghalibaf said the strategic waterway would not return to its pre-war status. "The Strait of Hormuz will not return to pre-war conditions," Ghalibaf said in an interview broadcast on state television. "Iran has the right to sovereignty over the Strait of Hormuz and, of course, we will receive a fee for services."
President Trump warned that the United States was prepared to resume military action if Iran failed to comply with its obligations under the agreement. "If they don't behave, we'll go right back to dropping bombs right smack in the middle of their head," Trump said while attending the G7 summit.
Meanwhile, fighting continued on another front of the conflict. The Israeli military announced on Thursday that one of its soldiers had been killed during clashes in southern Lebanon a day earlier, while seven other soldiers were wounded. Although the US-Iran agreement is intended to halt hostilities across the region, including in Lebanon, Israeli Prime Minister Benjamin Netanyahu has maintained that Israeli troops will remain deployed in the country, where they continue to confront the Iran-backed Hezbollah movement.
Hezbollah leader Naim Qassem welcomed the agreement, describing it as a "great victory" and urging Lebanon to take advantage of the development to push for the withdrawal of Israeli forces from its territory. Negotiators from both sides are expected to begin technical discussions immediately after Friday's ceremony as efforts continue toward reaching a comprehensive and permanent settlement.
