US, Iran sign preliminary Hormuz deal ahead of formal ceremony

A senior US official on Monday said that President Donald Trump and Vice-President J.D. Vance had signed the memorandum of understanding electronically with Iran to formally reopen the Strait of Hormuz and end the American blockade of Iranian ports. The official also claimed Iranian Parliament Speaker Mohammad Bagher Ghalibaf signed the document on Tehran’s behalf. Trump “wanted to sign it personally because he wanted to show his dedication to the process and dedication to seeing this through to a successful resolution”, the official added, speaking on background. However, the Trump administration has still not released the document or details of the deal nearly 24 hours after Trump and Pakistani Prime Minister Shehbaz Sharif announced the agreement on social media on Sunday. According to US officials, the formal signing ceremony will still take place on Friday in Switzerland. Speaking to reporters during a bilateral meeting with French President Emmanuel Macron in Evian, France, Trump said the Strait was already partially open and would be “completely open” by Friday. “The deal’s all signed,” he added. “They’re doing a little hunting for a couple of mines that they’ve already found, but essentially, ships are starting to go out now.” According to Argus, a commodity market analytical firm, vessel traffic through the strait “has not changed”. “This suggests shipowners are waiting for the planned signing on 19 June and further details before attempting transits,” it added. In Iran’s first official statement, President Masoud Pezeshkian called the memorandum a “document of pride for the country” and said that a final agreement “has yet to take shape”. “What has been agreed upon is an important step toward stopping the war and beginning negotiations,” he wrote on social media. “The Islamic Republic of Iran has prepared itself for all options, and the government’s focus – with or without an agreement – is sincere service to the people.” On the Iranian claim of charging tolls from ships after a 60-day technical negotiation period, the administration official said that they “expect” the strait to remain toll-free. “We’re quite explicit in this MOU the strait will be open toll-free for 60 days, and we expect that to become part of the final agreement as well,” the official added. US officials also said the administration is exploring reconstruction proposals and is “prepared to release” Iran’s frozen funds and offer sanctions relief as “small gestures”. “In the MOU, we discussed the possibility of releasing frozen funds, sanctions relief, a big $300 billion fund to rebuild the country, and all of these things are going to be tied to performance,” an official noted. “We’ll do some small gestures of that in the beginning, if they make some small gestures to us that show that they’re willing to meet their commitments as well.” Since it was announced, the high-stakes deal has faced pushback and criticism over the lack of transparency and the failure to release terms of the memo of understanding some 108 days after the war was started by Trump and Israel. Since the outbreak of the war, global oil prices and inflation have risen sharply, forcing many countries to ration energy. A major impetus for Trump’s deal has been the looming midterm elections and growing discomfort over rising gas prices among his base. In the latest CNBC survey released Sunday, 81 per cent of US adults cite the cost of living as the biggest impediment to achieving the American dream. While crude oil prices trended lower on Monday following the announced 60-day ceasefire, pushing the national average down to US$3.99 a gallon, conditions could reduce the likelihood that the US Federal Reserve eases monetary policy. Trump has made little secret of his keen desire to see interest rates decline in advance of the election. “Stimulus is provided in times of duress,” said Henrietta Treyz, economic policy director with Veda Partners, a consultancy. “If the sting of a closed strait is alleviated, the urgency and impetus for legislative action similarly drops,” she added. “As such, we’re lowering our odds further this morning that economic stimulus is coming from Washington, either via Congress or via the executive branch in the wake of this 60-day ceasefire being reached.” Amid the prospect of an end to the war, all eyes are focused on how fast the logjam in the strait will ease. It took 12 weeks to see average US gas prices rise from US$2.81 to US$4.55 – still a fraction of what many other countries pay – and a rule of thumb is that it takes twice as long to see them drop back down given that prices can be “sticky”, analysts said. By that timeline, prices would not fall back to their pre-war level until around November 9, six days after the election. And that assumes that Sunday’s deal holds, two-way vessel traffic starts flowing relatively soon and dozens of bombed and otherwise damaged energy and transit facilities are brought back online. According to oil industry tracking firms, there are currently between 500 and 600 vessels waiting to exit the Persian Gulf through the Strait of Hormuz and another 300 empty vessels waiting in the Gulf of Oman to enter the strait from the other side. Normal traffic is typically between 60 and 100 ships a day, a figure that fell to near-zero during the height of the dual blockades. Energy intelligence firms say ship traffic this week is only moving at around 3 per cent of normal pre-crisis volumes.

US, Iran sign preliminary Hormuz deal ahead of formal ceremony

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Terms of the accord remain secret nearly a day after the announcement to end the conflict, with leaders due in Switzerland on Friday

Terms of the accord remain secret nearly a day after the announcement to end the conflict, with leaders due in Switzerland on Friday