US and Iran signal a peace deal is close

• The US and Iran are close to an initial agreement to end their war, with a text finalised. It involves reopening the Strait of Hormuz and lifting US sanctions on Iranian ports.
• The "performance-based deal" requires Iran to dismantle its nuclear programme and destroy uranium for economic benefits, including asset release and waived oil sanctions.
• Israel is not a party to the deal, maintaining its freedom to act against threats. Market reactions include rising shares and Brent crude prices falling over 3%.

DUBAI/WASHINGTON/PARIS - The United States and Iran signalled on 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.

Iran’s decision-making bodies were meeting to discuss the memorandum, Iran’s foreign ministry spokesperson said.

The terms of the so-called memorandum of understanding include reopening the Strait of Hormuz and lifting the US blockade on Iranian ports, the US official told reporters, adding that the deal met President Donald Trump’s core objectives and put negotiations “in a very, very good place”.

Leaked terms of the proposed memorandum outlined by Western, Pakistani and Iranian sources earlier on June 12 appeared to favour Iran, drawing criticism from Trump, who dismissed the reports as inaccurate.

While there were minor differences in the accounts, all appeared to offer Tehran much of what it has demanded so far, with Trump appearing to win little of what he has sought beyond the reopening of the strait, which Iran shut after the US and Israel launched attacks in February.

The US official, however, 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 – a key US demand.

Trump also reposted comments by Iranian Foreign Minister Abbas Araqchi, who said a memorandum to end the war had “never been closer.”

Pakistan, which has for weeks sought to broker a deal, said a final text had been settled upon.

“Pakistan is now working closely with both sides to finalise the next steps,” Prime Minister Shehbaz Sharif said in a post on X.

What’s in the deal?

Draft terms of the deal described to Reuters by multiple sources indicate that the US would immediately begin releasing billions of dollars in frozen Iranian assets and waive sanctions on its oil exports, in return for Iran opening the strait.

Discussion of Iran’s nuclear programme would be set aside for a 60-day period of talks on a final settlement, they 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.

Washington has repeatedly demanded Iran give up its stockpile of highly enriched uranium.

Another senior US official, describing the agreement, said the uranium stockpile “will be destroyed and removed” and Iran’s nuclear programme would be dismantled.

“None of their money released until they perform. Strait of Hormuz will be open. No Iran funding of terrorist groups,” the official said. “This is what they have agreed to. This is a performance-based deal.”

Vice-President J.D. Vance said on X: “First, the Iranians are not receiving any cash, and no funds are being released for simply signing a deal or attending a meeting.”

The deal ensures economic benefits would only flow to Iran if it meets its obligations under the agreement, he said.

Israel not party to memorandum

A Western source said that if language can be agreed, the memorandum could be signed as soon as June 14 by 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.

Israel, which launched the war alongside the United States, has not been part of the negotiations. Prime Minister Benjamin Netanyahu said his country would not be party to the memorandum.

Netanyahu has clashed with Trump in recent weeks over US demands that Israel curb military action in Lebanon to let Washington reach a deal with Tehran.

Israel’s defence minister said Israel would not withdraw from territory in Lebanon. A senior Israeli official said Israel expects under any deal to retain its freedom to act against what it deems threats in areas under its control.

Oil price falls

The 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.

Indications of a potential deal prompted global shares to rally and oil prices to slip. 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 Republicans hold hawkish positions on Iran and could have difficulty endorsing an agreement viewed as yielding concessions.

Tehran has always said its nuclear programme is peaceful and accepted tight curbs on it in return for the lifting of sanctions under a 2015 agreement with the administration of then-US president Barack Obama.

Trump abandoned that deal during his first term in 2018 and Iran responded by ramping up its enrichment of uranium, producing more than 400kg of material at close to the purity needed to make a bomb. REUTERS