Reports indicate the United States and Iran are moving closer to an agreement to extend a ceasefire and reopen the Strait of Hormuz, though officials on both sides state several terms still require further negotiation. Driven by hints from the White House and Tehran that a broad framework is nearing finalization, international oil prices fell sharply on Monday, May 25th.

Official statements suggest a signing is "not imminent." Iranian Foreign Ministry spokesperson Esmail Baghaei stated on Monday, "Consensus has been reached on many of the issues discussed, but no one can claim the signing of an agreement is near at hand." Earlier, U.S. Secretary of State Marco Rubio indicated Iran needed more time to respond to the American proposal. President Trump, facing pressure from Iran hawks who argue the emerging deal concedes too much, stated he would not rush the process. In a social media post, Trump said, "The deal with Iran will either be a great and meaningful deal, or there will be no deal. It will be the exact opposite of the disastrous JCPOA negotiated by the failing Obama administration."

The JCPOA, or Joint Comprehensive Plan of Action, was the agreement limiting Iran's nuclear program in exchange for sanctions relief and verification by the UN nuclear watchdog.

Market reaction saw crude oil prices drop over 5%, with Brent crude trading around $98 per barrel. Global stock markets broadly rose, a signal many traders interpreted as expectations that a deal could effectively end the conflict that had driven energy prices higher and exacerbated inflationary pressures. Harris Khursheed, Chief Investment Officer at Karobaar Capital in Chicago, noted, "For weeks, a lot of oil trading was based on a worst-case scenario. But once it became clear negotiations were ongoing and the situation wasn't escalating, some of the fear premium dissipated quite quickly."

Safe-haven capital that had flowed into gold, the U.S. dollar, and U.S. Treasuries due to the Middle East conflict is now being reallocated to risk assets like stocks. Gains on Monday in indices such as Japan's Nikkei 225, South Korea's KOSPI, and the pan-European STOXX 600 indicate global capital is positioning for a "peace restart" theme. However, despite a significant reduction in the fear premium, several market strategists caution that current oil prices still embed a degree of geopolitical risk discount—meaning the market has not fully priced out the possibility of a deal collapse.

The framework under discussion involves a ceasefire extension and Strait of Hormuz passage rights. Urged by several Arab leaders, the U.S. and Iran have been negotiating an extension of the current fragile ceasefire, though the two sides have offered differing descriptions of what an interim deal should contain. Multiple proposals have been exchanged in recent weeks. President Trump insists Iran must never be allowed to develop a nuclear weapon—a goal Iran denies having. Key sticking points include whether Iran will allow free vessel passage through the Strait of Hormuz during an extended ceasefire; whether Iran will permit the U.S. to take custody of its highly enriched uranium; and agreeing on the pace at which the U.S. would unfreeze billions in Iranian assets. The Iranian Foreign Ministry spokesperson stated Iran is seeking to collect "service and environmental protection shipping fees" for the Strait of Hormuz, rejecting the term "toll." It remains unclear if the U.S. would accept this arrangement. According to Iran's semi-official Tasnim news agency, citing informed sources, the U.S. and Iran still disagree on "one or two clauses."

The thorny nuclear issue has been explicitly excluded from the interim deal, left for subsequent negotiations. This "easier issues first" approach provides a window to cool short-term oil prices but also sows the seeds for medium-to-long-term geopolitical risk. Iran's nuclear program and the timeline for disposing of its near-weapons-grade enriched uranium will be negotiated after an interim deal is reached, with no guarantee of resolution. The U.S. is likely to push for Iran to commit to not enriching uranium for approximately 20 years. Iran currently possesses uranium enriched up to 60%, just a step away from weapons-grade (90%). The International Atomic Energy Agency has repeatedly warned that Iran is the only non-nuclear-weapon state producing uranium enriched to such a high level.

A Trump administration official revealed that, as part of the proposed interim deal, the U.S. plans to lift its blockade on Iran, and Iran has in principle agreed to dispose of its highly enriched uranium. Officials stated any sanctions relief would be contingent on Iran's compliance with all terms. However, Iran has not confirmed any of these details and has expressed an intent to retain its uranium stockpile. Furthermore, informed sources indicate the U.S. is likely to demand in subsequent nuclear talks that Iran commit to not conducting any uranium enrichment activities for about 20 years—a timeframe far exceeding the 15-year restriction set in the 2015 JCPOA, which limited enrichment to 3.67%.