U.S.-Iran deal promises end to war but how it will work remains unclear

World leaders welcomed news of a U.S.-Iran ceasefire deal as negotiators work through key issues before Friday's signing. Mike Le Couteur has more.

EVIAN-LES-BAINS, France/DUBAI/JERUSALEM -- Doubts swirled around the U.S.-Iran interim deal to end the war in the Middle East as shippers said it could take weeks for confidence to return after any reopening of the Strait of Hormuz, and fundamental questions remained unanswered.

U.S. President Donald Trump said on Tuesday that the deal to halt the conflict between the U.S. and Iran was “done” and going to a second stage, although details have yet to be made public and both countries say a permanent truce is yet to be negotiated.

The interim agreement would extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz, which Iran has effectively blocked since the U.S. and Israel attacked Iran in February.

Negotiators would address difficult issues like the future of Iran’s nuclear program during the next phase of talks, which Iranian Foreign Minister Abbas Araqchi said would start in Switzerland on Friday after the formal signing of the framework deal.

Two other issues that Trump and Israeli Prime Minister Benjamin Netanyahu used to justify the war - ending Iran’s support for regional armed proxies and curbing its missile program - are not thought to be on the agenda for those negotiations.

“We have our deal done with Iran, and it should be successful, it goes to a second stage, which I think would be actually easier,” Trump told reporters at a summit of the G7 group of big economies.

U.S. Vice-President JD Vance and Iran’s top negotiator Mohammad Baqer Qalibaf are expected to attend Friday’s formal signing in Geneva.

Final deal yet to take shape

Oil prices slid to new three-month lows on Tuesday, a day after tumbling nearly 5 per cent following news of the deal, though industry officials say Middle East oil and gas output will take months to fully recover.

Iranian President Masoud Pezeshkian wrote on social media Monday that the interim agreement was an “important step” toward stopping the fighting but noted a final deal for a lasting truce “has yet to take shape.”

Vance told CNN that the signed memorandum was a “very general document.” Details would be released over the next two days, U.S. officials said.

Vance said it included “a very significant sanctions relief package” for Iran. He later told Fox News that Trump may decide to release the agreement before Friday.

Both sides still face pressures following a conflict that killed at least 7,000 people, mostly in Iran and Lebanon, and upended global energy markets.

The accord exposes Trump to criticism from within his own party, while Iran’s leaders could face the risk of renewed protests if they fail to alleviate economic pressures after a destructive war.

U.S. and Iranian officials say it could eventually deliver substantial economic benefits to Iran by lifting sanctions and unfreezing foreign assets. It could also set up a US$300 billion reconstruction fund, paid for by neighboring Gulf states that host U.S. military bases and were hit by Iranian attacks during the war.

U.S. officials, speaking on condition of anonymity, said Iran would have to satisfy U.S. demands never to build a nuclear weapon and cut off support for militias like Hezbollah in Lebanon in order to get those benefits.

Iranian officials, who have always denied intending to build a nuclear weapon, say they have given up little by agreeing to resume diplomatic discussions over Iran’s uranium enrichment program that were interrupted by the war.

Caution over shipping

While the latest agreement could lift Iran’s chokehold on the Strait of Hormuz, which normally carries about one-fifth of the world’s trade in oil and liquefied natural gas, shippers say a return to normal traffic could take weeks.

One concern is the possible presence of mines in the narrow waterway between Iran and Oman. A thorough minesweeping operation would “take weeks to months,” an official with Greek maritime security company Diaplous told Reuters on Tuesday.

Iran has suggested it will retain control with Oman over the strait. The U.S. said the strait will be open toll-free for 60 days and it would expect that provision to be part of a final agreement.

Trump said in a Truth Social post that ships loaded with oil were starting to move out of the strait, “going along the Southern ‘Highway’.” Reuters reported that the U.S. military had been overseeing scores of secretive ship-to-ship oil transfers to keep Gulf energy exports flowing.

Uncertainty over Lebanon

The conflict between U.S. ally Israel and the Iran-allied Hezbollah militia in Lebanon, which has uprooted 1.2 million people, remains another complication.

Iran has said the deal requires a full cessation of hostilities there, but Netanyahu said Israel would keep its forces in southern Lebanon and retain the right to respond to Hezbollah attacks.

“Iran wanted us to withdraw from it, but I stood firm,” he said on Monday. Trump said on Tuesday he was “not happy” with the way Israel had handled itself in Lebanon as he was trying to reach a deal with Iran. Israel has not directly participated in the peace talks with Iran.

A U.S. official said an Israeli withdrawal from Lebanon, which it invaded in March after Hezbollah joined the war, was not a condition of the deal.

Araqchi said Israeli attacks must stop immediately.

Reporting by Reuters bureaus; Writing by Stephen Coates and Aidan Lewis; Editing by Raju Gopalakrishnan, Alexandra Hudson, Reuters