Trump and Iran Sign Peace Deal Reopening Strait of Hormuz

President Donald Trump and Iranian President Masoud Pezeshkian signed a 14-point memorandum of understanding and interim peace agreement starting June 17, 2026, to end a conflict that began in February. The deal terminates a U.S. naval blockade and mandates the reopening of the Strait of Hormuz, a critical chokepoint for 20% of global oil supplies. To facilitate the recovery, the U.S. Treasury Department issued a 60-day general license allowing Iran to sell crude oil and petroleum products through August 21.

Following the announcement, global oil prices dropped sharply, with Brent crude falling from peaks near $120 to approximately $75 per barrel. U.S. gasoline prices dipped below $4 per gallon for the first time since March. However, the recovery has been volatile; Iran briefly claimed to re-close the strait on June 20 following Israeli attacks in Lebanon, though the U.S. military denied these reports. By June 23, oil flows reached a record 19 million barrels in a single day, though a backlog of stranded vessels and sea mines continue to complicate shipping.

Global financial institutions responded to the volatility. The Bank of England maintained interest rates at 3.75% despite internal dissent from policymakers who favored a hike to counter war-driven inflation. In Pakistan and India, governments moved to pass international price reductions to domestic consumers. While the interim deal establishes a 60-day negotiation window for a permanent accord, tensions persist over nuclear inspections and transit fees, with Secretary of State Marco Rubio asserting that international law prohibits tolls in the waterway.