By Nana Karikari, Senior Global Affairs Correspondent
The United States and Iran are on the precipice of a sweeping diplomatic breakthrough to end months of devastating military conflict. The primary focal point of the deal is the immediate reopening of the Strait of Hormuz. A bilateral deal could be sealed within days, according to President Donald Trump and Iranian officials, with an imminent memorandum of understanding expected to unlock the strategic waterway. This high-stakes framework could instantly alter the global energy and security landscape.
The proposed accord was mediated primarily by Pakistan and Qatar. It represents the most significant diplomatic breakthrough since an active, multi-front war erupted on February 28. That conflict began following joint U.S. and Israeli airstrikes across Iran. The initial phase of the deal is structured as a two-page, 14-point memorandum of understanding (MOU). Dubbed the “Islamabad Agreement,” it has brought both capitals to the verge of a historic compromise. Deep skepticism remains among regional allies, and friction persists on the ground.
The proposed bilateral accord was mediated primarily by Pakistan and Qatar. It represents the most significant diplomatic breakthrough since an active, multi-front war erupted on February 28. That conflict began following joint U.S. and Israeli airstrikes across Iran. The initial phase of the deal is structured as a two-page, 14-point memorandum of understanding (MOU). Dubbed the “Islamabad Agreement,” it has brought both capitals to the verge of a historic compromise. Deep skepticism remains among regional allies, and friction persists on the ground.
Reopening a Critical Maritime Chokepoint
A central pillar of the emerging agreement is the immediate restoration of commercial shipping through the Strait of Hormuz. The strategic waterway bypasses Iran and Oman. It serves as the main route for shipping crude from oil-rich nations like Saudi Arabia and Kuwait. The U.S. Energy Information Administration calls the channel a critical oil chokepoint. It notes that the strait normally handles 20 million barrels of oil per
day, or about one-fifth of daily global production. The corridor also carries about one-fifth of global trade in liquefied natural gas, largely from Qatar.
The waterway has been effectively closed since Tehran responded to the February 28 airstrikes. While some producers like the United Arab Emirates found alternative routes, roughly 10 million to 12 million barrels of crude remain daily choked off from global markets.
Under the terms of the draft MOU, Iran has agreed to lift its wartime restrictions. It will restore prewar shipping baselines within approximately 30 days. In exchange, the United States will simultaneously terminate its naval blockade of Iranian ports. This will allow the immediate resumption of Iranian commercial shipping and maritime trade.
However, the future governance of the vital corridor remains a point of divergence. U.S. officials maintain that passage must return to a standard of free navigation without arbitrary levies. Conversely, Tehran has signaled that it intends to reshape the maritime status quo.
“Based on Iran’s firm decision, the future of the Strait of Hormuz and the way it is administered will not be the same as in the past,” Iranian Foreign Minister Seyed Abbas Araghchi stated in a live interview on state television. He added that while international law prohibits traditional transit tolls, “charges for services provided will be collected. And this will be formalized during the negotiations.”
The enduring volatility of the waterway was underscored late Friday. U.S. Central Command (CENTCOM) confirmed that American forces intercepted and downed multiple Iranian one-way attack drones targeting commercial vessels in the area. CENTCOM stated on X that “Iran launched multiple one-way attack drones in an attempt to strike commercial ships transiting the Strait of Hormuz.” The military added that “U.S. forces have downed all of them in recent hours as traffic flow through the strait continues unimpeded. The international trade corridor remains open for transit.”
Araghchi coupled his diplomatic optimism with an explicit warning regarding Iran’s maritime posture. He asserted, “Our sword will remain poised over the Strait of Hormuz indefinitely, and whenever necessary, Iran’s armed forces will intervene.” Tehran and Oman are expected to issue a joint statement soon regarding the future administration of the strait.
A Two-Stage Diplomatic Roadmap
The diplomatic architecture relies on a strict, sequential two-stage negotiation process. The impending signature on the initial 14-point MOU is intended to formalize an
immediate 60-day extension of a fragile ceasefire. This extension comes after the truce effectively collapsed this week with both sides exchanging two rounds of tit-for-tat strikes. Araghchi noted that the difficulty in reaching an agreement on the wording has been severe. It took negotiators two months to produce a document that is less than two pages long.
The signing will trigger a transition into intensive technical negotiations. The most sensitive items have been deliberately deferred to this second phase. These include the long-term status of Iran’s nuclear program and permanent sanctions relief. “The negotiations are structured in 2 stages. The first stage is writing the memorandum, and the second stage is the start of formal negotiations,” Araghchi explained. “The nuclear issue and the lifting of sanctions on Iran have been deferred to the second stage, for which a 60-day negotiation period has been envisaged.” He added that “In the second stage of the negotiations, discussions will cover the lifting of sanctions, uranium enrichment, the future status of enriched material stockpiles, and the framework for Iran’s reconstruction fund.”
The primary objective of the subsequent 60-day window will be addressing Iran’s cache of near bomb-grade enriched uranium. This is an essential ingredient to make a nuclear bomb. U.S. officials have stated that the technical talks must ensure all highly enriched material is destroyed on-site and permanently removed from the country. However, the precise mechanism for doing so is still to be worked out.
Iranian officials have expressed an entirely different vision for their nuclear inventory. “From our perspective, the only acceptable method for dealing with the enriched material is to dilute it within Iran,” Araghchi stated. His comment indicates that the physical destination of the material remains an unresolved flashpoint.
The urgency surrounding the nuclear material has been compounded by recent intelligence indicators. According to five sources familiar with U.S. intelligence, Tehran has dramatically escalated internal efforts to seal off its cache of roughly half a ton of highly enriched uranium. These fortifications include deliberately collapsing access tunnels and booby-trapping facility entrances with explosive mines.
The effort was apparently triggered by public hints from Washington. President Donald Trump had previously signaled that he might order the U.S. military to seize the material. These physical modifications make reaching the cache far more difficult, dangerous, and time-consuming than it was just a month ago. The move raises serious questions about who will take on the hazardous task of digging it out.
Financial Contingencies and Performance Rules
The economic dimensions of the accord have generated sharp, public rhetorical friction between Washington and Tehran. Iranian state media and some internal officials initially claimed the deal would trigger the immediate upfront release of billions of dollars in frozen foreign assets. Mohsen Rezaei, a military adviser to Iran’s Supreme Leader, claimed the U.S. had agreed to release part of the country’s frozen assets.
President Donald Trump aggressively rejected those assertions. Trump stated on Truth Social: “The terms that Iran leaked out to the Fake News have NOTHING to do with the terms that were agreed to, in writing. What they said, including their weak and pathetic statement on having a deal, bears no relation to the truth.” Trump later told Axios that he still believes a deal could be signed over the weekend or Monday. He demanded clarification from Iran for the state media reports. Trump added that Iranian officials privately “apologized for putting out false information.”
Senior U.S. administration officials stressed that the MOU contains no upfront financial payouts. The White House has structured the agreement strictly around verifiable performance rather than trust. Economic integration, the permanent lifting of secondary sanctions, and the unfreezing of assets will occur incrementally. These measures are directly tied to Iran’s execution of its technical nuclear commitments. A senior administration official emphasized that the deal is a “performance-based deal” and no money will be released until Iran honors its commitments.
The agreement does outline an eventual war-related reconstruction plan to address damage inside Iran. It also contains explicit clauses requiring both nations to respect each other’s sovereignty and not meddle in each other’s affairs.
Regional Ceasefires and Geopolitical Friction
The scope of the ceasefire constitutes another significant point of contention among regional actors. Araghchi insisted that the agreement functions as an inclusive regional settlement. He stated that the deal will include a “ceasefire on all fronts.” This explicitly includes Lebanon, where Israel has renewed its deadly offensive. The deal calls on Iran to stop funding proxy groups in the region, a reference to Hezbollah and other Iranian proxies across the Middle East.
Araghchi stated that the end of the war also means Israel’s withdrawal from Lebanon. He emphasized that the document outlines mutual commitments to halt the initiation of war or the threat of force.
This framework faces severe headwinds from Israel. Israeli Defense Minister Israel Katz previously stated that his country will not withdraw from Lebanon, Syria, Gaza, or the West Bank. Furthermore, Israel is heavily opposed to the agreement.
U.S. officials indicated they feel confident that Israel will ultimately align with the broader stabilization framework. However, they have explicitly refused to rule out independent, ongoing Israeli military actions against Hezbollah positions if attacks on northern Israel persist.
Final Deliberations in Washington and Tehran
The shadow of past hostilities hangs heavily over the current text. Saturday marks exactly one year since an initial 12-day war between Iran and Israel broke out on June 13, 2025. That conflict began when Israel launched Operation “Rising Lion,” targeting the heart of Iran’s nuclear infrastructure and military command. The U.S. later entered the war, with President Trump ordering the bombing of several nuclear sites before Qatar brokered a June 24 ceasefire. The short-lived conflict dealt a heavy blow to Tehran, costing it most of its air defenses, missile plants, and leading scientists. The current war began eight months later, meaning both capitals are negotiating under intense domestic pressure.
Despite the immense structural hurdles, an unprecedented level of official optimism has emerged. The deal could possibly include a formal signing ceremony in Switzerland with Vice President JD Vance. Pakistani Prime Minister Shehbaz Sharif confirmed that the MOU has been agreed upon and awaits finalising.
In Tehran, the agreement has exposed clear political divisions. Araghchi acknowledged that there are active “supporters and opponents” of the current terms within Iran’s top security body, the Supreme National Security Council. Internal legislative leaders have demanded absolute compliance with any signed terms. Iranian Parliament Speaker Mohammad Bagher Ghalibaf wrote on X: “Commitments made must be commitments kept. No ifs, no buts, no excuses. For the close deal ahead, there is no other way. You reap what you sow.” Ghalibaf previously led the Iranian delegation in talks with the U.S. in Islamabad in April.
The absolute final impediment to the agreement is the formal sign-off from Iran’s Supreme Leader, Mojtaba Khamenei. While President Trump told reporters his understanding was that Khamenei had already signed off, Iranian officials urged caution. Iranian Foreign Ministry spokesman Esmail Baghaei stated that Iran remains in the “final stages of internal deliberations.” He added, “We must first wait for a final decision to be made internally.” Baghaei declined to comment on where or when the deal would be signed.
With the drafting process finalized, leaders from both nations suggest an announcement could occur within days. Araghchi summarized the current momentum on X, stating that an “Islamabad Memorandum of Understanding” between the U.S. and Iran has “never been closer.” Araghchi told state TV, “as soon as the final stages of our negotiations are completed, this agreement will be signed and announced.” He added, “This could happen in the coming days. I am very hopeful.” If approved, the agreement will be signed remotely.
The looming signature represents a critical pivot point for Middle Eastern diplomacy. If finalized, the Islamabad Agreement will pause an active war and immediately untangle a severe global energy bottleneck. Yet the true test of the accord lies not in its imminent signing, but in the upcoming 60 days of technical execution. With booby-trapped nuclear tunnels in Iran, ongoing drone friction in the strait, and explicit opposition from Israel, the path from a two-page memorandum to a lasting peace remains a fragile and dangerous calculus.
