US and Iran on brink of deal to end war as drones shot down near Strait of Hormuz

The United States and Iran are on the verge of signing a deal to end their war, with both sides saying on Friday that an agreement has been reached in principle. A senior US administration official, speaking on condition of anonymity, said Washington expects to sign an initial deal in the coming days. Iranian Foreign Minister Abbas Araqchi told state television that the tentative agreement shows Iran has emerged stronger from the conflict. “Iran is the winner of the war with the US,” he said.

Hours after those remarks, US forces shot down multiple Iranian one-way attack drones heading toward the Strait of Hormuz, a source familiar with the matter told Reuters. The source said the drones posed a threat to commercial traffic. US Central Command later confirmed the action and said the waterway remains open for transit. Iranian news agencies reported that explosions were heard along the strait near Iran’s Sirik port and Qeshm island. Residents and local officials said the blasts came from Iranian forces firing warning shots at vessels attempting to cross without permission from the Revolutionary Guards’ navy.

The proposed memorandum of understanding calls for reopening the strait and lifting the US naval blockade on Iranian ports, according to sources on all sides of the talks. Negotiations over Iran’s nuclear program – US President Donald Trump’s stated rationale for starting the war – would take place afterward. The US official said the deal meets Trump’s core objectives and puts negotiations “in a very, very good place.”

Accounts of the draft proposal from Western, Pakistani, and Iranian sources pointed to terms that could favor Iran, drawing criticism from Trump, who dismissed the reports as inaccurate. While there were minor differences in the details, the proposals broadly offer Tehran much of what it has sought, with Trump appearing to secure little beyond the reopening of the strait, which Iran closed after US and Israeli strikes in February. Araqchi said Iran would, along with Oman, retain control of traffic through the strait, which before the war handled one-fifth of the world’s oil and gas supply. “Our sword will always hang over the Strait of Hormuz,” he said.

A Western source said the deal could be signed as soon as Sunday by US Vice President JD Vance and Iran’s parliament speaker, Mohammad Baqer Qalibaf, with Geneva seen as the likeliest venue. The US administration official said Europe had been discussed as a venue for signing but no decision had been made. Araqchi said the deal would be signed remotely before it is announced.

What's in the deal

Draft terms described to Reuters by multiple sources indicate the US would begin releasing billions of dollars in frozen Iranian assets and waive sanctions on its oil exports, in return for Iran opening the strait. Iran’s nuclear program would be addressed during a 60-day period of talks. The US official said the agreement would ultimately lead to the dismantling of Iran’s nuclear program, with its stockpile of highly enriched uranium to be destroyed and removed. The terms also include an inspection regime to ensure compliance over the long term.

But Araqchi told state television that Iran, which sources said hasn't accepted the dismantling of its nuclear program, wanted to retain the uranium in diluted form. “For Tehran, the only preferred solution for its highly enriched uranium stockpile is down-blending the material,” he said. The proposals include discussion of possible war reparations for Tehran and dropping longstanding US demands for limits on Iran’s missile program, the sources said. The US official disputed that account. “None of their money released until they perform. Strait of Hormuz will be open. No Iran funding of terrorist groups,” said the official. “This is what they have agreed to.

This is a performance-based deal.”

Israel not party to memorandum

Israel hasn't been part of the negotiations and Prime Minister Benjamin Netanyahu said his country wouldn't be party to the agreement. Netanyahu has clashed with Trump in recent weeks over US demands that Israel curb military action in Lebanon to allow Washington to reach a deal with Tehran. Araqchi said the agreement would end the war in Lebanon, implying an Israeli withdrawal from occupied areas. Israel’s defense minister said it wouldn't withdraw. A senior Israeli official said Israel expects to retain its freedom to act against threats.

Oil price falls

Progress towards an agreement has emerged at the end of a week that brought a sharp escalation in hostilities in the Gulf, including Israeli-Iranian exchanges of fire and US strikes on Iranian targets, followed by retaliation against US bases. Global stock markets rose and oil prices fell on the news. Brent crude dropped by more than 3 percent on Friday as traders priced in the reopening of the Strait of Hormuz, which had been closed since February, disrupting global energy supplies.