Trump Signs Iran Deal, Shifting Focus to Hormuz and 60-Day Talks

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(Bloomberg) — US President Donald Trump formally agreed an interim peace deal with Iran, shifting focus to the planned reopening of the Strait of Hormuz and a complex 60-day negotiating period over Tehran’s nuclear program.

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Trump signed the so-called memorandum of understanding at the Palace of Versailles near Paris on Wednesday evening, at the end of a Group of Seven summit. He was flanked by world and business leaders, including French President Emmanuel Macron and Blackstone Inc. Chief Executive Officer Steve Schwarzman, who applauded as he did so.

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“Oil down,” Trump immediately said, emphasizing why he has been so keen to end a war with Iran he started alongside Israel at the end of February. The conflict and Iran’s closure of the critical waterway caused energy prices to soar, and led to chaos across the Middle East.

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Trump said further military conflict “could have caused an international depression.”

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Those concerns led him to accept an agreement many Iran hawks in the US, as well as Israel, say concedes far too much to the Islamic Republic in terms of sanctions relief and potentially unfreezing tens of billions of dollars of funds. Many say it looks no better than the Obama administration’s 2015 nuclear deal that the US leader calls the “worst deal ever.”

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“History teaches us giving billions of dollars to theocratic lunatics who want to murder us is not a good idea,” said Senator Ted Cruz, a Texas Republican who is normally supportive of Trump’s policies.

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While ships weren’t moving en masse through the Strait of Hormuz as of Thursday morning, some appeared to sail through. Three Saudi Arabian supertankers that had been stuck inside the Persian Gulf were recorded as being in the Gulf of Oman, on the other side of the chokepoint. That represents the first large volumes, around 6 million barrels, of Saudi oil to cross the strait since the war began more than three months ago.

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Many shipping and oil executives have said they need more clarity, including on whether the strait is clear of mines and whether they need to seek any kind of permission from Iran before sailing through.

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There’s also confusion over whether Iran will allow ships free passage. Iranian media has said that might only happen for two months, before Tehran starts charging navigation fees. The US, Europe and Gulf Arab states have balked at the idea of Iran charging a toll for what’s widely considered international waters.

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Oil fell further on Thursday, with Brent dropping 1.9% to $78.10 a barrel. It’s down from close to $95 since Trump said late last week that a deal was imminent.

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Still, oil remains roughly 30% higher for the year, with energy traders saying it will take months, if not longer, for volumes of oil and liquefied natural gas going through Hormuz to return to normal.

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US Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf, Iran’s lead negotiator, are scheduled to meet in Switzerland on Friday for a ceremony to mark the signing and start a further round of negotiations to permanently end the war.