Oil prices tumbled on Thursday after US President Donald Trump and his Iranian counterpart separately signed an accord to end the Middle East war, with the Strait of Hormuz set to reopen but two months of tricky negotiations lying ahead.
In a sudden development after uncertainty over when the deal agreed earlier this week would be formally signed, Trump put his name to it in thick black ink at a candlelit dinner with French President Emmanuel Macron at the Palace of Versailles outside Paris late Wednesday.
Macron — for whom the signing at the palace, which hosted the signing of the treaty that ended World War I, was an immense coup following his hosting of the G7 summit — shouted “bravo” as Trump signed.
“This was not easy, I can tell you,” said the US president of agreeing the memorandum of understanding.
Iranian President Masoud Pezeshkian also signed the agreement, Iranian foreign ministry spokesman Esmaeil Baqaei said, adding that “now it is time to test the implementation of the agreement”.
Crude fell more than three percent Thursday, extending the losses sustained since news of the deal broke at the weekend.
– ‘Allows for peace’ –
The deal should bring an end to the current US-Israeli conflict with the Islamic republic, which saw five weeks of all-out war until a ceasefire early April and shipping greatly restricted in the Strait of Hormuz, causing a spike in energy prices.
Prime Minister Shehbaz Sharif of Pakistan, which helped mediate the agreement, said on X that it “shall enter into force with immediate effect” and Iran “will instantly reopen the Strait of Hormuz”. He also signed the accord.
A two-month negotiating period now begins with all eyes on the reopening of Hormuz and if progress can be made in talks over the Iranian nuclear programme, which Washington has long suspected 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 there remained confusion over the next steps, with the accord originally supposed to have been signed at an exclusive mountain-top resort in Switzerland on Friday by Iran’s chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, and US Vice President JD Vance.
Baqaei said an in-person ceremony was no longer needed. 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.
And 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, the deal says.
UN atomic agency chief Rafael Grossi told reporters in Geneva it was ready to begin defining the “concrete steps” that will need to be taken to implement a US-Iran deal.
US officials also said Iran will dilute its enriched uranium stocks, possibly by “down-blending on site” under the supervision of the UN watchdog.
Baqaei insisted Iran’s missile programme was not part of the agreement.
– ‘Foreign policy blunder’ –
There has been criticism from hardliners within Iran of the deal to end the war, which was described there as an “imposed war” similar to the 1980-1988 conflict with Saddam Hussein’s Iraq. But Ghalibaf insisted the deal represented a US “failure”.
And Trump’s decision to pull the plug on the war, in which 13 US service members were killed and vast amounts of US ammunition stockpiles were used, has unsettled some of his allies at home.
Apparently anticipating such 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 from Trump’s Republican Party described it as the “worst foreign policy blunder in decades”.
“Iran’s nuclear ambitions were not curbed, and they have learned that threatening the Strait of Hormuz works,” he said.
In another possible stumbling block, Iran has insisted that the deal covers Lebanon, which was drawn into the conflict when Hezbollah fired rockets at Israel on March 2 in support of Iran.
While violence has declined in Lebanon following the announcement of the deal, an Israeli drone strike in south Lebanon killed one person on Thursday, according to Lebanese state media.
On Thursday, the Israeli military announced that one of its soldiers had been killed in fighting in southern Lebanon the day before, in an incident that also wounded seven soldiers.
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