Iranian state media on Friday released details of a draft memorandum of understanding with the United States, outlining a 14-point framework that could lead to the reopening of the Strait of Hormuz within 30 days. The document, reported by Mehr News Agency and cited by CNBC, sets conditions for final negotiations, including the release of half of Iran's frozen funds, suspension of oil sanctions, and an end to the US naval blockade that has curtailed Iranian oil revenues since the ceasefire in early April.
The draft also requires the US and its allies to present reconstruction plans for Iran valued at no less than $300 billion. In return, Iran commits to reopening the Strait of Hormuz within 30 days under the terms outlined. The White House had not commented on the reported terms at the time of publication.
President Donald Trump claimed Thursday that the US had "just made a great settlement of the war with Iran," pending "finalization of documents," and stated the Strait of Hormuz would reopen as soon as an agreement is signed, according to the Wall Street Journal. Trump later suggested Vice President JD Vance could travel to Europe for a signing ceremony as early as this weekend.
Officials in Tehran were more cautious, emphasizing that a final conclusion had not yet been agreed. Qatar, which has acted as mediator throughout the talks, said its efforts "led to progress in the proposals under discussion within the framework of ongoing negotiations," with a delegation returning from Tehran earlier Thursday carrying new language for the draft under discussion.
The potential reopening of the Strait of Hormuz carries significant implications for global oil markets. The waterway, through which about 20% of the world's oil passes, has been effectively closed since early April, contributing to supply constraints. The OPEC+ decision to lift quotas by 188,000 barrels per day for July has had limited impact on actual output, which remains at 33.19 million bpd due to the blockade.
Earlier tensions had escalated when Iran halted nuclear talks and threatened to close the Strait of Hormuz, causing Brent crude to surge 4% to $95 per barrel. The latest developments suggest a potential de-escalation, though market participants remain wary given the history of failed negotiations.
Investors should note that while the draft agreement represents progress, the path to a final deal remains uncertain. The ceasefire set for June 19 signing and the reopening of the Strait of Hormuz after a four-month blockade would mark a significant shift in regional dynamics, but the devil lies in the details of the 14-point document.
For financial advisors, the key takeaway is that the resolution of the Strait of Hormuz blockade could alleviate upward pressure on oil prices, potentially benefiting sectors sensitive to energy costs. However, the lack of a final agreement and the cautious tone from Tehran suggest that volatility in energy markets may persist until a definitive deal is reached.
