The United States and Iran announced a framework peace deal on Sunday, bringing their 15-week conflict to a tentative end and sending oil prices tumbling. President Donald Trump confirmed the agreement, which is expected to be signed later this week, and said the strategic Strait of Hormuz would reopen to tanker traffic. Brent crude dropped 5% to below $83 a barrel, its lowest in three months, while European wholesale gas prices fell 6%.
The deal, according to leaked drafts, includes an immediate 60-day period of intensive technical talks on contentious issues including Iran's nuclear program. Iran's deputy foreign minister said negotiators aim to reach a broader agreement that includes sanctions relief. Defense Secretary Pete Hegseth indicated the pact remained on track despite earlier strikes traded between Hezbollah and Israel, saying, "From all I know, we are on track. It's not a matter of if, it's a matter of when."
Republican senators offered mixed reactions. Sen. Deb Fischer (R-Neb.) expressed doubt that Israel was trying to scuttle the emerging deal, stating, "Israel is defending its country, and it's defending its people." Meanwhile, Sen. Shelley Moore Capito (R-W.V.) criticized Congress for failing to pass surveillance extensions later Sunday. The Federal Reserve, under new chair Kevin Warsh, is expected to hold interest rates steady this week as the deal eases inflation pressures.
Markets rallied on the news, but analysts caution that oil and gas prices may not return to prewar levels for months. The Guardian reports that buyers are racing to refill depleted emergency crude stockpiles after more than 100 days of the worst documented disruption to global energy supplies. The S&P 500 and other indices rose as investors priced in lower energy costs and reduced geopolitical risk.
Hardliners in Iran have expressed anger, arguing the proposed deal does not guarantee an end to sanctions, compensation, or control of the Strait of Hormuz. Israel's defense minister said its forces "will remain in the security zones in Lebanon, Syria and Gaza – indefinitely," despite being frozen out of the negotiations.