WASHINGTON — In a major geopolitical shift, Donald Trump has officially announced a historic US-Iran peace pact, bringing an immediate halt to military operations. The landmark ceasefire agreement includes provisions for the reopening of the Strait of Hormuz, signaling a potential end to the ongoing regional conflict.
Taking to Truth Social on Sunday, the president confirmed the deal was complete, declaring, “Ships of the world, start your engines. Let the oil flow.” He fully authorized the toll-free opening of the strategic waterway and the immediate removal of the American naval blockade. The announcement came as preparations were underway for the UFC Freedom 250 event on the White House grounds. Confirming the diplomatic breakthrough on X, Pakistani Prime Minister Shehbaz Sharif stated that both nations have agreed to the immediate and permanent termination of military operations across all fronts, explicitly including Lebanon. The official signing ceremony is slated for Friday, June 19, in Geneva, Switzerland, with Vice President JD Vance confirmed to attend.
While the announcement marks a significant de-escalation, Gil Barndollar, a senior fellow at Defense Priorities, described the arrangement as a 60-day temporary expedient. According to Barndollar, this window is designed to stabilize the region while complex issues like sanctions relief and a nuclear deal are set aside for future negotiation. Despite the positive end to hostilities, he advised caution, noting that the details are still being solidified.
Further specifics emerged from a 14-article draft memorandum of understanding shared by Iran’s mayor. The proposed framework mandates the complete lifting of the U.S. naval blockade and the reopening of the Strait of Hormuz within 30 days, operating under Iranian arrangements. It also calls for the suspension of sanctions on Iranian oil and petrochemical sales, alongside an immediate and permanent halt to the war on all fronts. Notably, the draft excludes Iran’s missile program and its support for resistance groups from the final talks. Furthermore, the agreement requires the release of $24 billion in blocked Iranian funds during the negotiations, with half of that sum made available before final talks commence. The final pact is also expected to be endorsed by a UN Security Council resolution.
The financial commitments outlined in the draft are substantial. The memorandum stipulates that the U.S. and its allies must formulate reconstruction plans for Iran totaling at least $300 billion. Barndollar highlighted the heavy financial burden, pointing out that the deal involves providing $12 billion in unfrozen funds right out of the gate, another $12 billion later, and coordinating the massive reconstruction effort. He characterized the arrangement as essentially paying Iran to end the war. Beyond the financial cost, Barndollar warned that the United States is entering this agreement in a far worse strategic position than when the conflict began, citing significant degradation in U.S. military readiness, capabilities, and munition stockpiles. This comes despite previous assertions by Trump that Iran’s military had been essentially destroyed.
A critical near-term hurdle involves the northern front. Barndollar emphasized that the most pressing question is whether the United States can and will restrain Israel. He noted that Israel possesses the ability to scuttle the agreement if it continues military operations in Lebanon, a long-standing red line for Tehran. To preserve the deal, the U.S. might need to leverage its influence, potentially up to withholding direct American military support. Conversely, the agreement presupposes that Iran has the capability to restrain Hezbollah from launching any further attacks against Israel.
The urgency behind this agreement is heavily tied to global energy markets. As the conflict has persisted, international pain from oil and gas shortages has escalated. While the United States remains somewhat insulated by its massive domestic energy sector, the shortages have severely impacted Africa and Asia—though the latter has been partially cushioned by China’s strategic petroleum reserves. With global oil supplies drawing down, economic pressure is poised to hit Europe and the American public. Iran is also feeling the squeeze of the naval blockade; while they have increased overland trade and utilized Caspian Sea routes, the inability to import and export through the Strait has inflicted real economic damage. Barndollar suggested that this mutual pain makes the deal more likely to endure than previous diplomatic attempts.
Despite Trump’s assertion that the Strait of Hormuz is already open, Iranian state media claims they will maintain control of the waterway with supervision from Oman. Barndollar observed that domestic gas prices have not fully synced with the grim realities on the ground, remaining better off than the facts suggest. A successful reopening could drive prices down further, but practical hurdles remain. It is currently unknown how heavily the Strait has been mined or how quickly those obstacles can be cleared within the 30-day window. Furthermore, there are questions about how quickly Iranian forces will physically facilitate the flow of traffic. Ultimately, Barndollar concluded that near-term oil market movements will likely be driven more by sentiment than by the immediate facts on the ground as the world awaits the Geneva summit.
