Big swing for petrol prices
The US and Iran agreed to a two-week ceasefire expected to halt the American-Israeli military campaign, in exchange for Tehran reopening the Strait of Hormuz, portending a temporary de-escalation while broader tensions may remain unresolved.
President Donald Trump announced the agreement Tuesday on social media hours after Pakistan, a mediator in talks, implored the US leader to back off his deadline to unleash massive devastation on Iran if it did not meet his demands.
The deal buys time for the two sides to reach a longer agreement to end the six-week-old war, which has killed thousands of people and sparked a global energy crisis.
Trump said he had agreed “to suspend the bombing and attack of Iran for a period of two weeks” as long as Iran agrees to “the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz.”
Iranian Foreign Minister Abbas Araghchi said in a statement that “for a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran’s Armed Forces” and that if attacks against Iran are halted, “our Powerful Armed Forces will cease their defensive operations.”
Israel has also agreed to the ceasefire, according to a White House official.
Some Arab states in the Persian Gulf reported continued attacks by Iran in the immediate aftermath of Trump’s announcement, leaving uncertainty over when the truce would begin.
Oil fell the most in almost six years after Trump announced his decision, which came roughly 90 minutes before his 20:00 deadline for Iran to reopen the strait or face a massive military bombardment.
Global benchmark Brent crude slid as much as 16% to $91.70 a barrel. The oil price is the biggest factor in the determination of petrol and diesel prices.
MSCI’s Asia Pacific Index jumped 4.1% to a three-week high and equity-index futures for Wall Street gauges rose more than 2% and European stock futures surged 5%.
Permanent resolution still far off
Both the US and Iran are portraying the ceasefire as a “victory,” but significant differences remain between their demands to bring the war to a complete end, according to Mona Yacoubian, a senior adviser with the Middle East Program at the Center for Strategic and International Studies.
“Iran says it will allow free passage for the next two weeks through the Strait of Hormuz but in coordination with Iran’s armed forces. If the US agrees to that, that is a huge concession to Iran,” she said on Bloomberg TV after the announcement of the truce.
Trump’s choice represents a dramatic climb-down from a bellicose social media post earlier Tuesday, in which he warned “a whole civilization will die tonight, never to be brought back again” if Iran didn’t give in.
His threats to attack Iran’s civilian infrastructure, including power plants, may have amounted to war crimes if they were carried out.
While markets breathed a sigh of relief, the ceasefire addressed a crisis Trump helped create when the US and Israel launched the war in late February.
It didn’t address his demands for limits on Iran’s nuclear, missile or drone programs.
And there was no indication the US was prepared to meet Iran’s desire for a permanent agreement and the lifting of sanctions.
“It gives essentially a bit of a reprieve from the path of escalation they were on, but clearly we’re still far away from any kind of resolution to the conflict — much less the issues underlying the conflict,” said Michael Singh, a former senior director for the Middle East at the National Security Council under George W. Bush.
After Trump’s initial post, it was unclear whether a path toward de-escalation could be established immediately.
Pakistani Prime Minister Shehbaz Sharif, a key mediator, said Tehran, Washington and their allies had agreed to a complete ceasefire that would include Lebanon, where Israel is waging a parallel conflict against the Iran-aligned Hezbollah militia.
Israeli Prime Minister Benjamin Netanyahu disputed that, saying the temporary deal doesn’t extend the ceasefire to Lebanon.
Kuwait, Saudi Arabia, Bahrain and the United Arab Emirates, as well as Israel, reported missile and drone attacks by Iran in the immediate aftermath of Trump’s announcement, leaving uncertainty over when the ceasefire would take effect.
The US expected orders to stand down from strikes would take time to reach Iran’s Islamic Revolutionary Guard Corps, Axios reported. Such lags are typical in conflicts, with hostilities often continuing before gradually tapering off.
US forces in the early hours of Tuesday hit military targets on Iran’s major oil export hub of Kharg Island.
Trump sets off rushed negotiations
Trump’s social-media post had earlier set off an 11th-hour rush by mediators to resume the indirect negotiations.
Sharif, Pakistan’s prime minister, earlier posted on social media that talks were “progressing steadily, strongly and powerfully” and that his country had asked Iran to open the Strait of Hormuz “for a corresponding period of two weeks as a goodwill gesture.”
Later Tuesday, Sharif invited all sides to Islamabad to continue negotiations. White House Press Secretary Karoline Leavitt said discussions about the next phase of talks were ongoing but “nothing is final.”
Some of Trump’s biggest backers — and strongest proponents of the attacks — expressed caution about the agreement.
“We must remember that the Strait of Hormuz was attacked by Iran after the start of the war, destroying freedom of navigation,” Senator Lindsey Graham, the South Carolina Republican, said on X.
“Going forward, it is imperative Iran is not rewarded for this hostile act against the world.”
The complete terms of a possible pact weren’t disclosed. Trump only said the US had received a 10-point proposal from Iran, describing it as “a workable basis on which to negotiate.”
“Almost all of the various points of past contention have been agreed to between the United States and Iran, but a two-week period will allow the Agreement to be finalized and consummated,” he said.
Trump later told AFP he believed China had encouraged Iran to negotiate and that Iran’s uranium stockpile would be “perfectly taken care of.”
Iran’s demands include its continued control of the Strait of Hormuz, acceptance of its nuclear enrichment activities, the lifting of all primary and secondary sanctions, and a withdrawal of US combat forces from the region, according to a statement by its Supreme National Security Council carried by state media.
Much remains unclear about the ceasefire agreement and whether it will hold.
The two-week period can be extended by mutual agreement, though Iran will enter talks with “complete distrust,” its state media said.
Still, the decision to stand down — at least for now — marked the latest case of the president backing off a threat to broaden the list of military targets in Iran to include civilian infrastructure such as power plants and desalination facilities.
In March, he had given Iran five days to reopen the strait or face such attacks, and then extended the deadline another 10 days.
The pattern has become so well-known that it even has its own acronym — TACO, or Trump Always Chickens Out.
Ship movements key
Focus will now return to Hormuz and whether ships can pass safely through the vital waterway.
While some vessels have made it through the strait in recent weeks, they’ve generally not been from countries Iran views as hostile or having at least tacitly supported the US and Israeli strikes.
“That is the real litmus test — whether operators in the field — ship owners, ship operators — change their behaviours, following the announcement of the ceasefire and maybe some type of reassurance that ships beyond just the already flagged Iraqis are safe,” said Clayton Seigle, a senior fellow at the Center for Strategic and International Studies in Washington.
The two-week ceasefire plan includes allowing both Iran and Oman to charge fees on ships transiting through the Strait of Hormuz, the Associated Press reported, citing a regional official who had been directly involved in negotiations.
Iran would use the money it raised for reconstruction, according to the report.
Before Trump’s post, dated Brent crude, the price valuing most of the world’s real-world oil transactions, had shattered all previous records, hitting $144.42 per barrel, while Brent futures, an international benchmark, traded near $109.
A two-week deadline delay is likely to reset oil prices down to about $100 per barrel. That’s emerged as something of a new baseline during the conflict.
“That delay by itself would be enough probably to take us down to our new resting level, which is not all the way back by any means,” said Kevin Book, managing director of Washington-based ClearView Energy Partners.
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