Washington and Tehran Near Historic Accord

Synopsis

On 23 May 2026, President Donald Trump announced that the U.S.-Iran peace accord is 'largely negotiated', with plans for the re-opening of the Strait of Hormuz. Iran's government-backed media challenged crucial parts of the assertion while Pakistan's military chief was a pivotal mediator. The deal, which remains unsigned, must be given the final approval of both Washington and Tehran's supreme leader.

The Week of Brinkmanship Comes to a Closing But to No One's Surprise: A Draft on the Table

Then, on the morning of 23 May 2026, President Trump appeared at his ‘Truth Social’ using the website to make it clear that a peace agreement with Iran was ‘largely negotiated’ and would be announced soon. The statement came as Washington had been openly mulling a new package of military action to break a fragile ceasefire in place since 8 April.

The war started on February 28, 2026, when the United States and Israel struck Iran simultaneously. The closure of the Strait of Hormuz by Iran - the narrow waterway through which about two-thirds of the world's traded oil flows - caused the oil prices and global supply chains to go haywire in the months that followed.

The outline of the proposed deal

The draft plan, made available to The Associated Press by the official with regional knowledge of the negotiations, would consist of a formal declaration of ending the hostilities, followed by a two-month period of negotiations over Iran's nuclear programme. The Strait of Hormuz will be opened again and the U.S.A. would end the embargo against Iranian ports.

Iran's Foreign Ministry said that the initial phase of the proposed accord was a memorandum of understanding, and more extensive discussions would take place in 30 to 60 days. But Iran's Fars news agency, which belongs to the Islamic Revolutionary Guard Corps, angrily responded to Trump's characterization saying it was "incomplete and inconsistent with reality," and that the Strait would be subject to Iranian supervision under the terms of the exchanged.

Nuclear Sticking Points are still unresolved

Tehran was not ready to abandon its holding of highly enriched uranium and the nuclear issue wasn't included in the preliminary framework, a high-ranking Iranian official quoted by Reuters on Sunday said. In his first substantive public comment on the possible deal, Israeli Prime Minister Benjamin Netanyahu stated the dismantling of Iran's nuclear enrichment facilities and the removal of enriched material from Iranian soil must be part of any agreement.

Pakistan's role as a mediator

Field Marshal Asim Munir, Pakistan's army chief, played a key role as a back channel in the current round of diplomacy. On May 23, Pakistan's military stated that talks it held with President Masoud Pezeshkian in Tehran have led to 'encouraging progress towards a final understanding'.

Prime Minister Shehbaz Sharif said the meeting marked a “very useful and productive” exchange of views, giving Islamabad a prime opportunity to shine at the diplomatic level on a global issue of great importance. Secretary of State Marco Rubio told reporters in New Delhi that "something is going to happen," but added no specifics.

The Strait's significance in the global economy

The Strait of Hormuz, a 33-kilometre-wide choke point between Oman and Iran, has had repercussions that spread far beyond since it was effectively closed since late February. Before the war, it was used for 2/3 of the world's oil transport, around 30 per cent of the global trade in fertilisers and substantial amounts of petrochemicals, aluminium and liquified natural gas.

The closure could send global oil inventories, which have functioned as a ‘shock absorber' for the market, to ‘operational stress levels' in OECD countries within weeks, according to JP Morgan commodities analyst Natasha Kaneva, in a recent warning. Aluminium (Al) prices on the London Metal Exchange (LME) have climbed to more than $3,557 per tonne, up 14 to 20 per cent since the end of February.

What Happens Next

As it stands, the agreement has yet to be ratified. It must now be approved by Trump and most importantly by Iran's Supreme Leader, who has historically been the biggest obstacle to U.S.-Iran negotiations. There are several key points that are either ambiguous or open to interpretation, and that appear to be at odds between Trump's description of the deal and Iran's own state media account.

Neighbouring Gulf countries have been pushing hard for reopening the shipping lanes. On 23 May, Trump spoke with the leaders of Saudi Arabia, the United Arab Emirates, Qatar, Jordan, Egypt, Bahrain and Turkey, a reflection of the wide variety of regional impacts anticipated from the success or failure of the deal.

Supply chain normalisation, even if the Strait opens up tomorrow, will be a few months off, analysts note, which will affect energy markets and prices for consumers in Asia well into the second half of 2026.