Developments on the Middle East front are rapid. Just hours after US President Donald Trump retreated regarding "Project Freedom" for the Strait of Hormuz, information leaked from the White House suggests a 14-point Memorandum of Understanding (MOU) between the US and Iran aimed at establishing a roadmap for more detailed nuclear negotiations. The US is awaiting Iran’s responses on several key points within the next 48 hours. Although nothing has been agreed upon yet, sources cited by Axios state that this is the closest the parties have come to an agreement since the start of the war.
What the framework agreement provides
According to the same reports, among other provisions, the agreement will include Iran's commitment to a moratorium on uranium enrichment, a US agreement to lift sanctions and release billions in frozen Iranian funds, as well as the removal of restrictions by both sides regarding transit through the Strait of Hormuz. Many of the terms set out in the memorandum will be contingent upon reaching a final agreement, leaving open the possibility of a resumption of war or a period of prolonged uncertainty where the "hot" war has stopped, but nothing has truly been resolved.
Suspicion in the US
The White House believes—according to the same information—that the Iranian leadership is divided, and it may be difficult to reach a consensus among the different factions. Some US officials remain skeptical about whether even an initial agreement will be achieved. After all, US officials have expressed optimism for an agreement at several points during previous rounds of negotiations and during the current war, but have yet to reach one. However, the two US officials who spoke to Axios stated that the US President's decision to suspend "Project Freedom" and avoid the collapse of the fragile ceasefire was based on the progress of the talks.
The background
The one-page 14-point MOU is being negotiated between Trump’s envoys, Steve Witkoff and Jared Kushner, and several Iranian officials, both directly and through mediators. In its current form, the memorandum would declare an end to the war in the region and the start of a 30-day negotiation period for a detailed agreement on opening the straits, limiting Iran’s nuclear program, and lifting US sanctions. These negotiations could take place in Islamabad or Geneva, according to US officials.
Iran’s restrictions on shipping through the Strait and the US naval blockade would be lifted gradually during this 30-day period, according to a US official. If negotiations collapse, US forces would be in a position to restore the blockade or resume military action, the official stated. The duration of the moratorium on uranium enrichment is a subject of active negotiation, with three sources stating it will be at least 12 years and one specifying 15 as a likely conclusion point. Iran proposed a 5-year moratorium, while the US demanded 20 years.
The US wants to introduce a provision whereby any Iranian violation in enrichment would extend the moratorium, the source reported. Iran would be able to enrich at the low level of 3.67% after its expiration. Iran would commit in the memorandum to never seek a nuclear weapon or conduct activities related to weapons manufacturing. According to a US official, the parties are discussing a clause whereby Iran would pledge not to operate underground nuclear facilities. Iran would also commit to an enhanced inspection regime, including snap checks by UN inspectors. At the same time, the US would commit, as part of the memorandum, to the gradual lifting of sanctions imposed on Iran and the gradual release of billions of dollars in Iranian funds frozen around the world. However, according to the same information, two sources with knowledge of the matter also claimed that Iran would agree to remove its highly enriched uranium from the country, a key US priority that Tehran had rejected until now. One source mentioned that an option under discussion is the transfer of the material to the US.
The suspension of "Project Freedom"
US President Donald Trump announced on Tuesday via a post on Truth Social that the US will temporarily halt "Project Freedom"—a military operation that had begun just one day earlier to escort commercial ships through the Strait of Hormuz—citing progress in negotiations with Iran. The Trump administration stated that approximately 23,000 sailors on ships from 87 countries have been trapped in the Persian Gulf following Iran's effective closure of the straits. The rise in oil and energy costs was already causing demand destruction worldwide, warned Nicolo Bocchin, co-head of fixed income at Azimut Group. He added that, even if the maritime passage reopens, the normalization of shipping and trade flows would still require "many weeks."
Oil prices collapse
Oil prices plummeted, extending losses after reports that the US and Iran are nearing an agreement to end the conflict. Specifically, Brent futures for July delivery fell 5.4% to $103.88 per barrel, while US West Texas Intermediate (WTI) crude saw losses of 6.3% to $95.79 per barrel.
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