Hormuz deal nears as Tehran holds back

The United States and Iran are edging towards a peace memorandum that could reopen the Strait of Hormuz and pause a three-month war, though Tehran has withheld final approval and warned it will not cross its negotiating red lines.

President Donald Trump said on Thursday that a settlement could be signed as soon as this weekend, possibly in Europe, and that the strait would “officially open” once the document was signed. He said Vice President JD Vance could sign for Washington and suggested that Iran’s top leadership had accepted the broad framework. Tehran responded with caution, saying the text had been largely settled in its main sections but remained under review.

Foreign Ministry spokesperson Esmaeil Baghaei said major portions of a possible understanding had been finalised, while rejecting reports that a completed agreement already existed. His comments underscored a familiar divide: Washington is presenting the talks as close to a breakthrough, while Tehran is stressing process, sovereignty and non-negotiable positions.

A senior US official said negotiators were close to the finish line and that the initial memorandum could be signed within days. The official described the arrangement as performance-based, with economic relief for Iran tied to compliance rather than granted at signing. The framework would reopen normal oil traffic through Hormuz, lift the US naval blockade on Iranian ports and open a 60-day period for technical negotiations over Iran’s nuclear programme.

The nuclear provisions remain the most contentious element. Washington says the deal would prevent Iran from developing or procuring nuclear weapons, dismantle weapons-related infrastructure, remove and destroy highly enriched uranium, and establish a long-term inspection regime. Iran denies seeking nuclear weapons and is resisting language that could be read domestically as surrendering its sovereign rights. Foreign Minister Abbas Araqchi has indicated that Tehran prefers down-blending its enriched uranium stockpile rather than dismantlement or removal dictated by Washington.

The diplomatic opening follows a week of renewed military pressure around the Gulf. US forces shot down multiple Iranian one-way attack drones heading towards the Strait of Hormuz, saying they posed a threat to commercial traffic. Iranian outlets reported explosions near Sirik port and Qeshm island, with local accounts describing warning fire by Revolutionary Guards naval forces against vessels attempting passage without authorisation. US Central Command later said the waterway remained open for transit.

The war, which began after US and Israeli strikes on Iran on February 28, has killed thousands, disrupted shipping and intensified pressure on energy-importing economies. It has also tested a ceasefire announced in April, with both sides trading attacks this week and Trump cancelling planned strikes after negotiators reported progress. The president has argued that any settlement must permanently block Iran’s path to a nuclear weapon, while Tehran has demanded sanctions relief, access to frozen assets and recognition of its role in managing Hormuz traffic.

Markets reacted swiftly to signs of movement. Brent crude fell more than 3 per cent to its lowest level in nearly two months, while equity markets gained as traders bet that a reopening of Hormuz would ease supply risk. The strait normally handles about 20 million barrels a day of oil flows, around one-fifth of global petroleum liquids consumption and more than a quarter of seaborne oil trade. It also carries around one-fifth of global liquefied natural gas trade, mainly from Qatar.