Iran and the United States Sign MoU To END Hostilities And Reopen Hormuz

Iranian President Masoud Pezeshkian (@drpezeshkian) has confirmed the signing of the Islamabad Memorandum of Understanding between the Islamic Republic of Iran and the United States, a diplomatic agreement aimed at ending months of active conflict between the two countries.

What the Agreement Says

The document is formally titled the "Islamabad Memorandum of Understanding between the United States of America and the Islamic Republic of Iran." Iran's Foreign Ministry confirmed the text was finalised with the signatures of the presidents, with Trump signing at the Palace of Versailles following the G7 summit.

Under the first point, both sides declare an immediate and permanent end to the war on all fronts, including Lebanon, and commit to refraining from any hostile action or threat of force against each other. The US naval blockade of Iranian ports is also set to end under the memorandum.

In return, Iran will make arrangements for the safe passage of commercial vessels with no charge, for 60 days, from the Persian Gulf to the Sea of Oman and vice versa. Commercial traffic is to resume immediately, with demining of the region to be completed within 30 days.

The agreement defers many of the most difficult issues, including how to wind down Iran's nuclear program, until a final deal is reached, and paves the way for a broader 60-day negotiation period. It also paves the way for sanctions relief and a $300 billion reconstruction incentive for Iran, contingent upon a final deal being agreed.

Why Hormuz Matters

Shipping traffic through the Strait of Hormuz had been largely blocked by Iran since February 28, 2026, when the United States and Israel launched an air war against Iran. The Iranian Revolutionary Guard Corps issued warnings forbidding passage through the strait, boarded and attacked merchant ships, and laid sea mines in the waterway.

The Strait of Hormuz, through which an average of 20 million barrels per day of crude oil and oil products were shipped in 2025, is one of the world's most critical oil transit chokepoints. About 93% of Qatar's and 96% of the UAE's LNG exports transit through the strait, representing 19% of global LNG trade. The closure sent energy and commodity prices sharply higher across global markets.

Oil prices eased and stocks rallied following the news of the potential peace agreement. However, the deal faces domestic pressure on both sides. Iran's hardliners erupted against the MoU with death chants directed at chief negotiators Abbas Araghchi and Mohammad Bagher Ghalibaf. In the US, dissatisfaction was also reported among some Republicans who expressed concern that Iran was being treated leniently.

Both sides have emphasised that the memorandum of understanding is not a final settlement, with a full agreement expected to be negotiated over the 60-day window that follows. A formal signing ceremony is scheduled for Switzerland.

Sources:
Al Jazeera: Iran, US presidents sign deal to extend ceasefire, reopen Strait of Hormuz
CNN: US releases official agreement with Iran
International Energy Agency: Strait of Hormuz