The US and Iran have agreed on a Memorandum of Understanding to extend the current ceasefire for 60 days, though the deal still requires final approval from both sides before taking effect.
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US and Iran reach deal to extend ceasefire 60 days
The United States and Iran have reached a consensus on the text of a Memorandum of Understanding that would extend the current ceasefire for 60 days, according to people familiar with the negotiations, though the agreement still requires final approval from both governments before taking effect.
"The framework provides a structured pause to address the most immediate flashpoints, but the hard work of negotiating a permanent nuclear accord lies ahead," said Elena Fischer, a geopolitical risk analyst at Edgen. "Both sides have an incentive to de-escalate, but the gap between their opening positions remains wide."
The MoU would freeze hostilities that began Feb. 28 when the US and Israel launched Operation Roaring Lion against Iran's nuclear and missile infrastructure. Since then, the conflict has drawn in Hezbollah from Lebanon and Houthi forces from Yemen, with Iran continuing to block the Strait of Hormuz — a chokepoint that handles about 21 percent of global seaborne oil trade. Brent crude has swung between $72 and $89 a barrel since the ceasefire was first announced in April, reflecting persistent uncertainty over supply routes.
The 60-day extension buys time for nuclear negotiations expected to resume during the pause. President Donald Trump has claimed a deal is "largely negotiated" and could be signed within days, though Iranian officials have pushed back, saying key terms — including the reopening of the Strait of Hormuz and the scope of uranium enrichment restrictions — remain unresolved. The last time the US and Iran reached a nuclear framework was the 2015 Joint Comprehensive Plan of Action, which Trump withdrew from in 2018. That deal capped Iran's enrichment at 3.67 percent; current IAEA reports indicate Iran now enriches up to 60 percent purity, weeks from weapons-grade.
Oil markets face a binary outcome. If the MoU is finalized and the strait reopens, crude could shed $5 to $8 a barrel of the risk premium built in since February, according to traders surveyed by Bloomberg. If talks collapse, the US has signaled it could reimpose "maximum pressure" sanctions and resume strikes, a scenario that would likely push Brent above $95.
The extension also tests the durability of the US-Israel alliance under wartime stress. Israeli Prime Minister Benjamin Netanyahu has twice been forced by Trump to curtail planned retaliatory strikes against Iran and Hezbollah in Beirut, raising questions in Tel Aviv about Washington's commitment to Israel's security objectives. Iran's new hardline leadership has exploited that divide, using Hezbollah's survival as a bargaining chip to delay a final nuclear settlement.
For Gulf states, the stakes are existential. The UAE and Saudi Arabia have quietly urged Washington to secure a deal, fearing that a prolonged conflict could draw their territory into the crossfire. The Strait of Hormuz blockade has already disrupted oil flows to Asian buyers, pushing spot premiums for Saudi crude to multiyear highs.
The next 60 days will determine whether the MoU becomes a bridge to a comprehensive accord or merely a pause before a wider war. Markets are pricing for the former but hedging for the latter.
This article is for informational purposes only and does not constitute investment advice.
[1] Report: US-Iran Memorandum of Understanding to Extend Ceasefire for 60 Days[2] Israel’s ethnic cleansing of West Bank Bedouin and herding communities[3] THE ILLUSION OF TRUCE: How “Phoney Ceasefires Dragged Washington Into An Unwanted War[4] When will the Iran war end? Here's what Trump has said.[5] Iran and Hezbollah Emerge Emboldened by Trump Ceasefire
