US-Iran deal promises end to war but how it will work remains unclear

Doubts swirled around the US-Iran interim deal to end the war in the Middle East as shippers said it could take weeks for confidence to return after any reopening of the Strait of Hormuz, and fundamental questions remained unanswered.

US President Donald Trump said on Monday a preliminary agreement to end the conflict had been signed by the US and Iran, although details have yet to be made public and both countries said a permanent truce was yet to be negotiated.

The interim agreement would extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz, which Iran has effectively blocked since the US and Israel attacked Iran in February.

Negotiators would address difficult issues like the future of Iran's nuclear programme during the next phase of talks to be held during the 60-day window.

Two other issues that Trump and Israeli Prime Minister Benjamin Netanyahu used to justify the war - ending Iran's support for regional armed proxies and curbing its missile programme - are not thought to be on the agenda for those negotiations.

"The deal's all signed," Trump said after he arrived in France for a summit of the G7 group of big economies. He said Vice President JD Vance would attend a formal signing ceremony in Geneva on Friday.

Oil prices fell on Monday to their lowest level since 10 March, shortly after the blockade of the Strait of Hormuz, a narrow waterway between Iran and Oman, cut off one-fifth of the world's oil trade.

But on Tuesday the price steadied, reflecting a more cautious stance, with Brent crude futures LCOc1 sliding 0.3 per cent to $82.96 a barrel in Asian trading hours.

To be sure, the deal is the most significant step yet to resolve the conflict, which has killed at least 7,000 people, mostly in Iran and Lebanon, and upended global energy markets.

Iranian President Masoud Pezeshkian wrote on social media Monday that the interim agreement was an "important step" toward stopping the fighting but noted a final deal for a lasting truce "has yet to take shape."

Vance told CNN that the signed memorandum was a "very general document." Details would be released over the next two days, US officials said.

Vance said it included "a very significant sanctions relief package" for Iran. He later told Fox News that Trump may decide to release the agreement before Friday.

US and Iranian officials say it could eventually deliver substantial economic benefits to Iran by lifting sanctions, unfreezing foreign assets and setting up a $300 billion reconstruction fund, paid for by neighbouring Gulf states, which host US military bases.

US officials, speaking on condition of anonymity, said Iran would have to satisfy US demands never to build a nuclear weapon and cut off support for militias like Hezbollah in Lebanon in order to get those benefits.

Iranian officials, who have always denied intending to build a nuclear weapon, say they have given up little by agreeing to resume diplomatic discussions over Iran's uranium enrichment programme that were interrupted by the war.

While the latest agreement could lift Iran's chokehold on the Strait of Hormuz, that only restores the prewar status quo, and shippers say traffic will only restart once they are satisfied they can transit safely.

The chief executive of Japan's Mitsui OSK Lines 9104.T, a shipping giant with a fleet of more than 900 vessels including tankers, told the Financial Times shipowners would not sail through the Strait of Hormuz until they were confident the US-Iran deal was "material".

"Given the experiences in the last couple of months, I think it’s reasonable to assume that it may take at least a couple of weeks or if not a month," Tamura told the FT before Trump announced the deal.

The agreement between Washington and Tehran being finalised had not changed Tamura's view, the FT report said.

Iran has suggested it will retain control with Oman over the strait. The US said the strait will be open toll-free for 60 days and it would expect that provision to be part of a final agreement.

Trump said in a Truth Social post that ships loaded with oil were starting to move out of the strait, "going along the Southern 'Highway,' which is totally safe, secure, and pristine".

The fighting between US ally Israel and the Iran-allied Hezbollah militia in Lebanon, which has uprooted 1.2 million people, remains another key sticking point.

Iran has said the deal requires a full cessation of hostilities there, but Netanyahu said Israel would keep its forces in southern Lebanon and would retain the right to respond to Hezbollah attacks.

"Iran wanted us to withdraw from it, but I stood firm," he said on Monday at a news conference. Israel has not directly participated in the peace talks with Iran.

A US official said an Israeli withdrawal from Lebanon, which it invaded in March after Hezbollah joined the war, was not a condition of the deal.

Iranian Foreign Minister Abbas Araqchi said Israeli attacks must stop immediately.