US-Iran Peace Deal Set for Friday Signing, Trump Says Hormuz to Reopen

US President Donald Trump said a peace agreement with Iran had been completed and announced the reopening of the Strait of Hormuz, signalling a potential end to months of conflict that disrupted one of the world's most important oil shipping routes.

"The deal with the Islamic Republic of Iran is now complete," Trump said in a post on Truth Social on Sunday, adding that he had authorised the reopening of the Strait of Hormuz and the removal of the US naval blockade. "Ships of the world, start your engines. Let the oil flow," he said.

Trump's comments came after Pakistani Prime Minister Shehbaz Sharif said the United States and Iran had agreed on a peace framework and were expected to formally sign the agreement in Switzerland on Friday, according to Reuters. The agreement was reportedly facilitated through mediation efforts involving Pakistan and several Gulf states.

According to Reuters, the framework calls for an immediate cessation of hostilities and a 60-day ceasefire period during which both sides will negotiate a broader settlement covering sanctions relief, regional security issues and Iran's nuclear programme.

Iranian officials said that the proposed arrangement includes commitments by Tehran to freeze further nuclear advances during the negotiation period, while discussions continue on the phased release of frozen Iranian assets and the potential easing of sanctions.

The prospect of a reopening of the Strait of Hormuz triggered a sharp reaction in energy markets. Brent crude futures fell around 4% in early Asian trading on Monday to $84/bbl, while US crude futures dropped more than 4%, as traders unwound the geopolitical risk premium that had built up during the conflict.

For financial markets, however, the immediate focus is on the prospect of uninterrupted oil flows from the Gulf and the reduction of a geopolitical risk that had dominated commodity markets over recent weeks.