US President Donald Trump said on Monday a preliminary agreement to end the war in the Gulf has been signed by the US and Iran, though details have yet to be made public and both countries said a permanent truce is yet to be negotiated.
The agreement would extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz, which Iran has effectively blocked since the US and Israel attacked Iran in February.
Negotiators would address difficult issues like the future of Iran's nuclear program during the next phase.
"The deal's all signed," Trump said after he arrived in France for a summit of the G7 group of big economies. He said Vice President JD Vance would attend a formal signing ceremony in Geneva on Friday.
Oil prices fell to their lowest level since March 10, shortly after the blockade of the Strait of Hormuz, a narrow waterway between Iran and Oman, cut off one-fifth of the world's oil trade.
The deal is the most significant step yet to resolve the conflict, which has killed at least 7,000 people, mostly in Iran and Lebanon, and upended global energy markets.
But much about the agreement remains unknown, and whether its provisions differ from the April ceasefire was unclear.
Also Read: Iran-US peace deal: Details revealed
Iranian President Masoud Pezeshkian wrote on social media that the US-Iran memorandum of understanding was an "important step" toward stopping the fighting but noted a final agreement for a lasting truce "has yet to take shape."
Vance told CNN that the signed memorandum was only about 1-1/2 pages "and so it is a very general document." Details will be released over the next two days, US officials said. Vance said it included "a very significant sanctions relief package" for Iran.
US and Iranian officials say it could eventually deliver substantial economic benefits to Iran by lifting sanctions, unfreezing foreign assets and setting up a $300 billion reconstruction fund, paid for by neighboring Gulf states, which host US military bases.
US officials, speaking on condition of anonymity, said Iran would have to satisfy US demands never to build a nuclear weapon and cut off support for militias like Hezbollah in Lebanon in order to get those benefits.
Iran agreed to sharply curtail its nuclear program in a deal signed in 2015 with the US and other countries. Trump withdrew the US from that accord during his first term as president. That agreement allowed Iran to regain billions of dollars in frozen assets, which Trump has frequently derided as sending "pallets of cash" to Iran.
Trump appears to have achieved little of what he said he intended when he launched strikes on Iran with Israel on February 28. Iran's theocratic government remains in place, while his demands that Iran dismantle its ballistic missile program and end support for regional militias like Hezbollah remain unmet.
Also Read: Vance says Iran won't ever get nuclear weapon under deal
The new agreement also does not resolve the fate of Iran's stockpile of enriched uranium, which Trump says he wants destroyed or removed.
Iranian officials, who have always denied intending to build a nuclear weapon, say they have given up little by agreeing to resume the diplomatic discussions with Trump officials over the nuclear program that were interrupted in February by Trump's decision to launch the war.
While the latest agreement lifts Iran's chokehold on the Strait of Hormuz, that only restores the prewar status quo, and shippers say traffic will only restart once safety is assured.
Iran has suggested it will retain control with Oman over the strait. The US said the strait will be open toll-free for 60 days and it would expect that provision to be part of a final agreement as well.
Netanyahu says he 'stood firm'
The fighting between US ally Israel and the Iran-allied Hezbollah militia in Lebanon, which has uprooted 1.2 million people, remains a sticking point.
Iran has said the deal requires a full cessation of hostilities there, but Israeli Prime Minister Benjamin Netanyahu said that Israel would keep its forces in southern Lebanon and would retain the right to respond to Hezbollah attacks.
"Iran wanted us to withdraw from it, but I stood firm," he said at a news conference, where he acknowledged that he and Trump have had their differences over the conflict. Israel has not directly participated in the peace talks with Iran.
A US official said Israeli withdrawal from Lebanon, which it invaded in March after Hezbollah joined the war, was not a condition of the deal. Disagreement over whether Lebanon was included was also a point of contention in the April ceasefire agreement.
Also Read: Iran confirms US peace deal, demands Israel’s withdrawal from Lebanon
Security sources said on Monday that fighting had tamped down in Lebanon after the agreement was announced but had not ceased entirely.
Lebanese state media reported that an Israeli drone struck a car in the southern Lebanese town of Kfar Tebnit, killing the driver. Netanyahu said Israeli forces had killed four "militants."
Iranian Foreign Minister Abbas Araqchi said Israeli attacks must stop immediately.
Privately, Israeli officials' views of the deal have been negative. One senior official told Reuters on condition of anonymity that the agreement was "terrible for Israel," and that this assessment was shared throughout the government from Netanyahu down.
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