After months of war, soaring oil prices and fears of a wider regional conflict, hopes for a breakthrough are growing. Donald Trump says the United States and Iran are close to signing a deal that could end the three-month conflict and reopen the Strait of Hormuz, but Tehran insists key decisions have yet to be finalized.
A fragile sense of optimism returned to global markets on Friday after U.S. President Donald Trump declared that a peace agreement with Iran could be signed as soon as this weekend.
The proposed deal, if completed, would represent the most significant diplomatic breakthrough since fighting erupted between the two countries three months ago. The conflict has killed thousands, disrupted energy supplies and pushed global oil prices sharply higher after Iran effectively restricted shipping through the Strait of Hormuz, one of the world’s most important energy corridors.
Speaking at the White House, Trump said the two sides had reached what he described as a “great settlement” and suggested the Strait of Hormuz would reopen immediately after the agreement is signed.
“The strait will officially open as soon as we sign,” Trump told reporters, adding that a formal signing ceremony could take place in Europe over the weekend. He also indicated that Vice President JD Vance would attend the event.
Yet despite the optimism coming from Washington, Iran struck a more cautious tone.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei said large portions of the proposed agreement had been completed but stressed that Tehran had not yet reached a final decision. According to Iranian officials, the deal remains under review by the country’s leadership and decision making bodies.
The difference in messaging highlights the uncertainty that continues to surround the negotiations.
A deal may be closer than it has been at any point during the conflict, but both sides are still speaking as if important obstacles remain unresolved.
One of the central issues remains the Strait of Hormuz.
The narrow waterway handles a significant share of the world’s oil shipments, making it one of the most strategically important routes in global trade. Restrictions imposed during the conflict contributed to higher fuel costs and renewed fears about global economic stability.
Even as diplomatic talks progressed, military tensions continued.
U.S. forces reportedly shot down two Iranian attack drones after Tehran attempted to target commercial shipping in the area. Iranian authorities also stopped a tanker from passing through the strait, while reports from the region described explosions and continued military activity.
The contradiction between ongoing military incidents and advancing diplomacy underscores how fragile the situation remains.
Financial markets nevertheless responded positively.
Oil prices fell to their lowest levels in roughly two months as traders bet that a peace agreement could eventually restore normal shipping activity and ease pressure on global energy supplies. Stock markets across Asia and other regions also moved higher on hopes that the conflict may finally be nearing an end.
Trump has repeatedly said any agreement must prevent Iran from obtaining nuclear weapons.
Iran continues to deny that it seeks a nuclear arsenal and has instead focused on demands that include relief from international sanctions, access to frozen financial assets and recognition of its role in managing traffic through the Strait of Hormuz.
The negotiations are also drawing attention from regional powers.
Israel has publicly stated that it is not a party to the proposed agreement, though Israeli officials have reportedly communicated their expectations regarding Iran’s nuclear program, missile capabilities and support for regional proxy groups.
For Trump, the stakes extend beyond foreign policy.
The conflict has weighed heavily on his administration, particularly as rising fuel prices fueled domestic political pressure. Polling has shown growing voter frustration over energy costs, making a successful agreement potentially significant both diplomatically and politically.
For now, the world is waiting for confirmation.
Negotiators appear closer to a settlement than at any time since the war began, but the final decision still rests with leaders in Tehran and Washington.
Until signatures are on paper and ships begin moving freely through Hormuz again, uncertainty will continue to hover over both the Middle East and the global economy.
