The agreement, brokered after mediation led by Pakistan and supported by regional diplomacy, is due to be formally signed in Switzerland on Friday. It provides for a halt to hostilities, steps towards reopening the Strait of Hormuz and a 60-day negotiating period to resolve disputes over Iran’s nuclear programme, sanctions relief and maritime security. President Donald Trump said the deal was “complete”, while Tehran signalled acceptance of the framework but insisted that core issues remained subject to further talks.
Oil prices fell sharply as traders priced in the prospect of restored Gulf shipping. Brent crude dropped by more than 5 per cent on Monday to about $83 a barrel, pulling back from war-driven highs after weeks of supply anxiety. The reaction reflected relief that the main energy artery from the Gulf could reopen, though shipping operators remained wary before mine-clearance, naval procedures and legal guarantees are clarified.
The Strait of Hormuz remains the central test of the accord. Before the war, flows through the channel averaged about 20 million barrels a day, roughly a fifth of global petroleum liquids consumption and about a quarter of seaborne oil trade. Iran, Iraq, Kuwait, Qatar and Bahrain rely heavily on the passage for exports, while Saudi Arabia and the UAE have limited pipeline capacity to bypass it. The disruption also affected liquefied natural gas, container traffic and food imports.
Qatar welcomed the memorandum of understanding as an important step towards sustainable peace and economic growth, stressing freedom of navigation through Hormuz. The UAE called for full implementation, an immediate end to hostilities and respect for international law. The Gulf Cooperation Council said the accord should lead to a durable settlement of outstanding issues and wider regional understandings on security. Saudi Arabia and Egypt also backed the diplomatic track.
For Gulf capitals, the response reflected both relief and caution. The war exposed the vulnerability of energy facilities, ports and air routes in countries that had tried to stay outside direct confrontation while maintaining ties with Washington and channels to Tehran. Attacks on shipping and infrastructure forced emergency routing, raised insurance premiums and revived debate over whether Gulf states need a broader collective security arrangement beyond bilateral defence ties with the US.
Pakistan’s role as mediator has become a notable element of the diplomacy. Prime Minister Shehbaz Sharif said both sides had accepted the immediate and permanent termination of military operations on all fronts, including Lebanon. That claim was broader than some US and Iranian statements, which described the deal as a framework that must still be translated into enforceable commitments. The gap in language underlined why the Friday signing ceremony is being watched for the final text, verification provisions and sequencing of concessions.
The nuclear question remains the most contentious part of the bargain. Washington says Iran has accepted that it will not acquire a nuclear weapon and that international inspectors will return. Tehran has long denied seeking a weapon and maintains that sanctions relief, oil-export access and the release of frozen funds must accompany any restrictions on its programme. Both sides are expected to use the 60-day window to negotiate limits on enrichment, monitoring arrangements and the status of Iranian assets held abroad.
Israel has reacted coolly to the agreement, arguing that Iran must not be allowed to rebuild its military networks or advance its nuclear capabilities. Israeli forces have remained active in Lebanon despite ceasefire language linked to the deal, keeping alive one of the risks that could quickly test the accord. Hezbollah’s posture and the position of Lebanese authorities will be crucial to whether the regional dimension of the conflict eases or remains a flashpoint.
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