Key Highlights

  • Brent crude futures fell 4% in early Monday trading following the announcement.
  • The official signing ceremony is scheduled for Friday, June 19, in Switzerland.
  • A senior official said the draft includes the release of $25 billion in frozen Iranian assets.
  • America's annual inflation rate hit 4.2% in May, its highest level in three years.

The United States and Iran have agreed on a deal to end their war, with both sides declaring the immediate and permanent termination of military operations on all fronts, including in Lebanon, according to Pakistan's prime minister, who has served as a mediator between the two countries.

President Donald Trump confirmed the agreement on social media, writing that the deal with Iran is now complete. He said he had authorized the toll free opening of the Strait of Hormuz and the immediate removal of the US naval blockade of Iranian ports, with the strait set to reopen on Friday alongside the official signing of the agreement in Switzerland.

Iran's Supreme National Security Council confirmed that a memorandum of understanding had been finalized, with military operations on all fronts ceasing immediately and permanently starting Monday night. The naval blockade against Iran would also be lifted immediately, though negotiations toward a final agreement would be deferred until Washington fulfills its commitments under the memorandum.

The precise terms of the agreement were not immediately known. According to a senior Iranian official speaking before the announcement, the draft includes a US commitment to release $25 billion in frozen Iranian assets. A separate 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, while the Iranian official said the draft would allow Iran to dilute its enriched uranium domestically.

The fate of Iran's nuclear program and a more expansive agreement on the wider conflict, including sanctions relief, are expected to be negotiated during a 60-day ceasefire period, according to Iran's deputy foreign minister.

The deal came despite an Israeli strike on Lebanon on Sunday that drew criticism from both Iran and the US. Israel's defense minister said Israeli forces would remain in security zones in Lebanon, Syria, and Gaza indefinitely, while warning of a forceful response if Iran were to strike Israel over the situation in Lebanon.

Britain, Germany, France, and Italy said in a joint statement they were prepared to lift sanctions on Iran in exchange for verifiable steps to limit its nuclear program. The EU's foreign policy chief described the agreement as a potential breakthrough.

The announcement follows a quarter-point interest rate increase by the European Central Bank on Thursday, its first hike since 2023, as the conflict pushed eurozone inflation above target. US annual inflation reached 4.2% in May, its highest level in three years, with markets now pricing in a Federal Reserve rate increase before year end.

The Strait of Hormuz, a critical route for global oil, gas, and fertilizer shipments, has been effectively closed since the conflict began in late February, contributing to supply constraints and renewed concerns about stagflation across major economies.