Middle East Peace Agreement: Implications for Oil Exports and Economic Benefits for Iran
After four months of conflict, the United States and Iran are set to sign an interim memorandum of understanding in Switzerland on Friday. This agreement will initiate 60 days of negotiations aimed at resolving the ongoing war and establishing strict limitations on Iran’s nuclear program. The deal is expected to allow Iran to resume oil exports and access an economic development program valued at $300 billion.
The draft of the agreement, which has not yet been officially released, is currently being shared among allied nations at the G7 summit in France. Technical details are still being finalized, suggesting that some language may change before the signing ceremony.
Inside the Agreement
The memorandum outlines significant economic relief for Iran in exchange for its commitment to end restrictions on the Strait of Hormuz and to refrain from pursuing nuclear weapons. Following the signing, the U.S. Treasury Department will issue waivers for the export of Iranian crude oil and petrochemical products. Additionally, the U.S. will lift its naval blockade of Iranian ports, aiming to restore maritime traffic through the Strait of Hormuz to pre-war levels within 30 days.
Oil markets have reacted to the anticipated deal, with Brent crude prices dropping below $78 a barrel, the lowest in over three months. Prices have fallen 15% over the past four trading sessions, reflecting expectations that reopening the Strait of Hormuz could boost global oil supplies. However, the draft agreement does not address Iran’s existing stockpile of enriched uranium, stating that this issue will be resolved in a final agreement.
Financing Framework and Frozen Funds
The draft also proposes a framework for supporting Iran’s economic rehabilitation, with financing of at least $300 billion. It includes a commitment from the U.S. to release Iran’s frozen funds, although no specific timeline is provided. A U.S. official indicated that Iran would only receive benefits from the agreement if it meets its obligations, which include not obtaining nuclear weapons and ensuring free navigation through the Strait.
Iran is seeking guarantees regarding access to its frozen assets. Central Bank Governor Abdolnaser Hemmati stated that Tehran would demand full assurance of effective access to these funds after the interim agreement is signed. He emphasized that U.S. commitments to release Iranian assets are explicitly stated in the agreement.
Dispute Over $300 Billion Figures
U.S. President Donald Trump previously denied that the U.S. would pay Iran $300 billion. The draft clarifies that the U.S. and its partners will ensure financing of that amount. A significant challenge in negotiations remains the conflict involving Israel and the Iran-backed militant group Hezbollah. The draft stipulates that the war will end on all fronts, including in Lebanon, which requires approval from Israeli Prime Minister Benjamin Netanyahu.
Iran’s parliament speaker and chief negotiator, Mohammad Bagher Ghalibaf, stated that Israel must withdraw from occupied territories in Lebanon. The draft also mentions the potential lifting of U.S. sanctions on Iran, contingent upon a final agreement reached in the next two months. Additionally, the U.S. would withdraw military forces from surrounding areas within 30 days of a final settlement.
Uncertainty Over Timeline
There is uncertainty regarding when the agreement’s text will be made public. Trump has indicated it will be released after the signing ceremony, while a senior U.S. official suggested publication could occur within days. The signing ceremony is expected to take place at the Bürgenstock mountain resort near Lake Lucerne, with U.S. Vice President JD Vance leading the American delegation and Ghalibaf representing Iran. Trump described the agreement as a “done deal” that would prevent Iran from developing nuclear weapons, asserting that the U.S. would not pay war reparations or invest in Iran until Tehran proves itself.
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