Oil prices fell more than 4% after the US and Iran outlined a preliminary memorandum that includes provisions to reopen the Strait of Hormuz to commercial shipping and end the US naval blockade of Iranian ports, according to Iran’s foreign ministry.
The agreement has not yet been completed. Pakistani prime minister Shehbaz Sharif said a memorandum of understanding would be signed in Switzerland on Friday, while Iran has presented the document as the first stage of a wider process followed by 60 days of talks on a final agreement.
US president Donald Trump said the Strait of Hormuz would be open “toll free” and that the US naval blockade of Iranian ports would end. In an earlier social media post, he said: “The deal is scheduled to get signed tomorrow, and immediately after it is signed, the Hormuz Strait is open to all.”
Iranian foreign minister Abbas Araghchi said the proposed memorandum contains provisions on the Strait of Hormuz, but that details would be explained only after the text is finalised and signed. Iran’s foreign ministry also warned that media versions of draft texts should not be treated as official.
A draft version envisages reopening the Strait of Hormuz within 30 days under Iranian arrangements. European leaders welcomed the announced memorandum but said urgent reopening of the strait with “unconditional and unrestricted freedom of navigation” was essential, adding that they were ready to support defensive shipping reassurance and mine-clearance operations.
The Strait of Hormuz is a critical energy chokepoint. Around one-fifth of global LNG trade moved through the waterway in 2024, primarily from Qatar. Restrictions on tanker movements through Hormuz had contributed to the largest oil supply disruption in history.