The proposed deal, expected to be formally signed in Switzerland on Friday, has raised hopes of ending months of violence that have claimed thousands of lives, disrupted regional stability, and rattled global energy markets.
However, despite the optimism surrounding the announcement, critical questions remain unanswered, particularly regarding Iran's nuclear programme, which continues to be one of the most contentious issues between Tehran and Washington.
Strait of Hormuz Set to Reopen
One of the most significant aspects of the agreement is the planned reopening of the Strait of Hormuz, a crucial maritime route through which a substantial portion of the world's oil supply passes.
The closure and disruption of the waterway during the conflict contributed to heightened energy prices and uncertainty in global markets.
Announcing the development, Donald Trump declared that the agreement had been finalized.
“The Deal with the Islamic Republic of Iran is now complete,” Trump posted on social media on Sunday as he celebrated his 80th birthday.
He added:
“Ships of the World, start your engines. Let the oil flow!”
The statement immediately boosted market confidence, with investors anticipating smoother oil flows and reduced geopolitical risks in one of the world's most sensitive energy corridors.
Iran Confirms End to Hostilities
Iranian officials also confirmed the agreement, describing it as a pathway toward ending the conflict and beginning a broader diplomatic process.
Kazem Gharibabadi said the deal would bring an immediate halt to the war between the two countries.
“Immediate end” to the countries’ war and talks within two months to seek a “final agreement.”
His comments suggest that while a ceasefire framework has been established, further negotiations will be required to resolve outstanding disputes and secure a long-term settlement.
Pakistan Announces End of Military Operations
In a surprising development, Shehbaz Sharif announced that both sides had agreed to halt military operations across the region.
“Both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon.”
Sharif also acknowledged the diplomatic efforts of regional powers that played a role in facilitating negotiations.
He expressed gratitude to leaders of Qatar, Saudi Arabia and Turkey for supporting mediation efforts that helped bring the parties to the negotiating table.
Nuclear Programme Remains the Biggest Hurdle
Despite the positive developments, the most difficult issue—the future of Iran's nuclear activities—remains unresolved.
Reports from Iranian media suggested that the agreement includes provisions for the release of frozen Iranian assets held abroad.
According to Iran's Mehr News Agency, the United States could release billions of dollars in Iranian funds as part of confidence-building measures ahead of broader negotiations.
The agency cited a 14-point memorandum of understanding that reportedly provides for:
“The release of 24 billion dollars in frozen Iranian assets during the 60-day negotiation period.”
Neither the White House nor U.S. officials immediately confirmed those details.
The Trump administration has consistently maintained that any lasting agreement must address Iran's nuclear ambitions and its stockpile of highly enriched uranium.
In an interview with The New York Times, Trump acknowledged that negotiations were continuing over how long Iran would suspend uranium enrichment activities.
Washington was still negotiating whether Iran would suspend its enrichment for 20 years.
Trump suggested he could accept a shorter timeframe of 15 years but declined to discuss detailed negotiations publicly.
Global Leaders Welcome Diplomatic Progress
The announcement was met with widespread international support, as governments and international organizations expressed hope that the agreement could mark the beginning of a lasting peace process.
António Guterres described the agreement as:
“A critical step” toward resolving the war in the Middle East.
Meanwhile, the governments of United Kingdom, France, Germany and Italy issued a joint statement indicating their readiness to ease sanctions on Iran.
They pledged to work:
“With the US, Iran and regional partners to seize this moment, maintain momentum and achieve a long-term diplomatic settlement.”
Markets React Positively
Financial markets responded swiftly to news of the breakthrough.
Oil prices fell by more than four per cent during trading in Tokyo as investors anticipated a return to normal shipping activity through the Strait of Hormuz.
At the same time, the benchmark Nikkei 225 surged by about three per cent, reflecting improved investor confidence and expectations of lower energy costs.
The reopening of the strait could have far-reaching economic implications, helping to reduce fuel prices, ease inflationary pressures, and improve global supply chains disrupted by months of uncertainty.
U.S. Sees Economic Benefits
Speaking on the potential impact of the agreement, U.S. Vice President JD Vance said the deal could deliver lasting economic gains.
“What we’re going to be able to do is drive down the cost of energy, not just now but for the long term, and create a real engine of prosperity in the Middle East.”
Vance also revealed that he intends to attend the signing ceremony in Geneva and indicated that Trump could potentially join the event as well.
Israeli Strike Threatened Progress
The breakthrough came after a tense day that briefly threatened to derail the negotiations.
Earlier on Sunday, Israel carried out an airstrike targeting Hezbollah-linked areas in the suburbs of Beirut, prompting concerns that the fragile diplomatic process could collapse.
Trump reportedly expressed frustration over the timing of the strike and its potential impact on the negotiations.
In a phone interview with Axios, he sharply criticized Israeli Prime Minister Benjamin Netanyahu.
“I was so pissed off. I let him know.”
The strike revived memories of previous escalations in Lebanon that triggered retaliatory missile attacks and threatened wider regional conflict.
Iran has consistently argued that any agreement aimed at ending the broader war must also address the conflict involving the Iran-backed Hezbollah movement in Lebanon.
Cautious Optimism Ahead of Friday Signing
While the announcement has generated significant optimism across diplomatic and financial circles, many analysts caution that the true test of the agreement will come in the days ahead.
Key questions surrounding Iran's nuclear programme, sanctions relief, enforcement mechanisms, and long-term regional security arrangements remain unresolved.
Still, the planned signing ceremony in Switzerland represents the most significant diplomatic opening in months and could mark a turning point in efforts to stabilize the Middle East after a prolonged period of conflict and uncertainty.