Oil prices crashed on Thursday after US President Donald Trump and Iranian President Masoud Pezeshkian signed a surprise deal to end the Middle East war. Crude fell more than three percent, extending losses that started when news of the deal broke over the weekend.
Trump signed the memorandum of understanding at a candlelit dinner with French President Emmanuel Macron at the Palace of Versailles outside Paris late Wednesday. Macron shouted “bravo” as Trump put his name to the document in thick black ink. The palace hosted the signing of the treaty that ended World War I.
“This wasn't easy, I can tell you,” Trump said.
Iranian President Pezeshkian also signed the agreement, according to Iranian foreign ministry spokesman Esmaeil Baqaei. “Now it's time to test the implementation of the agreement,” Baqaei said.
The deal brings an end to the US-Israeli conflict with Iran, which saw five weeks of all-out war until a ceasefire early April. Shipping was severely restricted in the Strait of Hormuz during the conflict, causing a spike in energy prices.
Prime Minister Shehbaz Sharif of Pakistan, who helped mediate the agreement, announced on X that the deal “shall enter into force with immediate effect” and Iran “will instantly reopen the Strait of Hormuz.” Sharif also signed the accord.
A two-month negotiating period now begins. All eyes are on the reopening of Hormuz and whether progress can be made in talks over Iran's nuclear programme. Washington has long suspected Iran of harbouring a secret bomb-making programme.
Macron hailed the deal “which allows for peace, the reopening of the Strait of Hormuz without tolls, and 60 days to conclude an agreement on nuclear, ballistic, and regional activities.”
But confusion remains over the next steps. The accord was originally supposed to be signed on Friday at an exclusive mountain-top resort in Switzerland by Iran's chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, and US Vice President JD Vance. Baqaei said an in-person ceremony wasn't needed anymore. But Sharif said an official ceremony will take place on Friday in Switzerland, and technical talks will commence.
Under the text, Washington commits to immediately waive oil sanctions crippling Iran's economy. Once a final agreement is reached on Iran's nuclear programme, the United States will also facilitate the release of a $300 billion reconstruction fund supported by regional nations.
UN atomic agency chief Rafael Grossi told reporters in Geneva that the IAEA is ready to begin defining the “concrete steps” needed to implement the deal. US officials also said Iran will dilute its enriched uranium stocks, possibly by “down-blending on site” under UN supervision. Baqaei insisted Iran's missile programme isn't part of the agreement.
There has been criticism from hardliners inside Iran. They describe the war as an “imposed war” similar to the 1980-1988 conflict with Saddam Hussein's Iraq. But Ghalibaf insisted the deal represents a US “failure.”
Trump's decision to end the war has unsettled some of his allies at home. 13 US service members were killed in the conflict, and vast amounts of US ammunition stockpiles were used. Apparently anticipating criticism, Trump said at the G7 that he was prepared to “bomb the hell” out of Iran if they violated the agreement.
But US Senator Bill Cassidy, a Republican, called it the “worst foreign policy blunder in decades.” “Iran's nuclear ambitions weren't curbed, and they've learned that threatening the Strait of Hormuz works,” he said.
In another possible stumbling block, Iran insists the deal covers Lebanon. Hezbollah fired rockets at Israel on March 2 in support of Iran, drawing Lebanon into the conflict. Violence has declined in Lebanon since the deal was announced, but an Israeli drone strike in south Lebanon killed one person on Thursday, according to Lebanese state media. The Israeli military also announced that one of its soldiers was killed in fighting in southern Lebanon the day before, in an incident that wounded seven others.