Donald Trump Signs Historic Peace Deal With Iran: Oil Sanctions Lifted & Strait Of Hormuz Reopens

US President Donald Trump has said he has signed a memorandum of understanding with Iran aimed at ending the war in West Asia, with the deal expected to bring immediate relief on Iranian oil sanctions and reopen a critical shipping route for global energy trade.

Trump confirmed the signing while leaving Versailles, saying the document had been signed during his visit to France. “It's signed. I signed it in Versailles. Just signed it,” he said. A White House official also confirmed the signing when asked about reports that it took place during a dinner with French President Emmanuel Macron after a G7 summit.

The agreement, described by Iranian officials as the Islamabad Memorandum of Understanding, has come into effect even as the status of a planned signing ceremony in Switzerland remained unclear. Iranian foreign ministry spokesperson Esmaeil Baghaei said the document had been signed electronically and that the next test would be implementation.

What the US-Iran peace deal covers

The deal’s most immediate economic consequence is a waiver of US oil sanctions on Iran. Those sanctions have long restricted Tehran’s ability to sell crude in global markets and have been a central pressure point in Washington’s policy towards the Islamic Republic.

Under the draft text described by a senior US official, the Strait of Hormuz is also expected to be reopened quickly after months of disruption. The waterway is one of the world’s most important energy corridors, and any extended closure can affect crude prices, shipping insurance, freight costs and fuel import bills across major economies, including India.

The agreement does not settle all outstanding issues between Washington and Tehran. Instead, it creates a framework for further talks on Iran’s nuclear programme, possible financial concessions, and wider reconstruction support. That sequencing appears designed to secure a halt in fighting first, while leaving the most contentious questions for later negotiations.

A White House official said the memorandum signed by Trump and Iranian President Masoud Pezeshkian had been digitally signed earlier by US Vice President JD Vance and Iran’s chief negotiator Mohammad Bagher Ghalibaf, with Trump witnessing the process. Baghaei said the presidents’ signatures had finalised the text.

Why the Strait of Hormuz matters

The reopening of the Strait of Hormuz will be watched closely by energy markets. The narrow passage connects the Gulf with the Arabian Sea and is vital for crude and liquefied natural gas exports from major producers in the region. Even limited disruption there can raise concerns over supply security.

Shipping companies had largely stopped sending vessels through the strait after blockades by both the US and Iran, according to details shared by officials. Trump had earlier said the agreement would be signed on June 19 to allow time for mines in the strait to be cleared.

For countries dependent on imported energy, the practical question is whether tankers and insurers will treat the route as safe enough to resume normal operations. Formal reopening does not always mean an immediate return to full traffic, especially after a conflict that involved blockades and mine-clearing concerns.

The sanctions waiver could also reshape short-term oil flows. If Iranian crude returns to the market in larger volumes, it may ease pressure on global prices. However, the scale and pace of any impact will depend on enforcement details, buyer confidence, shipping capacity and how quickly Iran can restore export arrangements.

Nuclear talks and the reconstruction fund

The deal also refers to a possible $300 billion reconstruction fund backed by regional nations, but only after a final agreement is reached on Iran’s nuclear programme. Trump defended the development programme, saying it would not involve US government money and that Iran would benefit only if it “behaves”.

He also warned that US forces would strike Iran again if its leaders failed to follow the deal. That warning underlines the fragile nature of the agreement. While it has formally entered into effect, both sides will still need to show that they can implement commitments in a conflict environment.

Trump also indicated that he was prepared to release Iranian assets frozen over the years by the United States. That marks a shift from his previous position. “At a certain point in time, I guess we'll have to give it back,” he said. “If we didn't give it back, nobody would ever invest in the dollar again.”

The asset issue is likely to be politically sensitive in Washington. Supporters may argue that releasing funds could help secure compliance and reduce regional instability. Critics may question whether Iran should receive financial relief before a durable nuclear settlement is completed and independently verified.

For Tehran, the agreement offers immediate economic breathing room through oil sanctions relief and the prospect of wider financial gains. For Washington, the test will be whether the deal reduces hostilities, restores freedom of navigation and creates leverage for a nuclear settlement without committing US funds to reconstruction.

The agreement’s durability will depend on implementation rather than signatures. The first indicators will be whether the Strait of Hormuz reopens safely, whether Iranian oil exports resume under waivers, and whether both governments proceed to nuclear talks without renewed military escalation.