Iran peace deal looms while new military action flares near Strait of Hormuz

DUBAI/WASHINGTON – The United States and Iran signaled on Friday (June 12) that an agreement to end their war was close, with a senior US administration official saying both sides had agreed on a text and that Washington expects to sign an initial deal in the coming days.

Iranian Foreign Minister Abbas Araqchi said that while changes in the deal were still possible, the tentative agreement showed his country had emerged stronger from the conflict.

“Iran is the winner of the war with the US,” he said on state television.

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, who spoke on condition of anonymity, said the drones had posed a threat to commercial traffic. US Central Command later confirmed the action and said the waterway was open for transit.

Iranian news agencies had reported that explosions were heard along the strait in Iran’s Sirik port and Qeshm island, which residents and local officials attributed to shots fired by Iranian forces to warn vessels attempting to cross the waterway 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, sources on all sides of the talks said. Negotiations over Iran’s nuclear programme – US President Donald Trump’s stated rationale for starting the war – would take place afterward.

The US official, speaking on condition of anonymity, told reporters that the deal met Trump’s core objectives and put negotiations “in a very, very good place.”

Accounts of the draft proposal from Western, Pakistani and Iranian sources pointed to terms that could favour Iran, drawing criticism from Trump, who dismissed the reports as inaccurate.

While there were minor differences in the details, the proposals broadly offered Tehran much of what it has sought, with Trump appearing to secure little beyond the reopening of the strait, which Iran closed after the US and Israel 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 of the deal 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 programme 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 programme, 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 has not accepted the dismantling of its nuclear programme, 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 programme, 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, who spoke on condition of anonymity. “This is what they have agreed to. This is a performance-based deal.”

Israel not party to memorandum

Israel has not been part of the negotiations and Prime Minister Benjamin Netanyahu said his country would not 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 defence minister said it would not 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 prices were down more than 3 per cent at their lowest in nearly two months.

The conflict has become a political headache for the White House, amid rising fuel prices and slipping approval ratings for Trump.

Some Republicans worry that the war’s unpopularity could cost them control of Congress in November’s midterm elections. But many of Trump’s fellow Republicans may have difficulty endorsing an agreement viewed as too favourable to Iran.

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