The United States and Iran declared a permanent end to hostilities on Sunday, June 14, 2026, capping nearly four months of war that began with the killing of Supreme Leader Ayatollah Ali Khamenei and sent global energy markets into turmoil. Pakistani Prime Minister Shehbaz Sharif was the first to announce the agreement, posting on X that both sides had declared an “immediate and permanent termination of military operations on all fronts, including in Lebanon.” A formal signing ceremony is scheduled for Friday, June 19, in Switzerland.
From Strikes to Ceasefire: How the War Unfolded
The conflict erupted on February 28 when the US and Israel launched strikes on Iran, killing Khamenei and several senior commanders. Iran responded the following day with missile strikes that killed three people in the UAE, among them an Indian national. The fighting drew in regional actors: Hezbollah struck Israel days after the initial US-Israeli operation, triggering a broader Israeli offensive in Lebanon.
A two-week ceasefire was reached on April 8 after President Donald Trump warned of catastrophic consequences if Iran refused. When US-Iran talks in Pakistan broke down on April 12, Trump ordered the US Navy to blockade Iranian ports. On April 22, Trump extended the ceasefire indefinitely, but Iran fired on three ships in the Strait of Hormuz and seized two of them. By late May, Trump said an agreement to reopen the strait had been largely worked out. Then, between June 1 and 11, fighting flared again: Iran shot down a US drone and a US Army helicopter, and a US strike on a Palau-flagged tanker on June 10 killed three of 24 Indian sailors on board.
The Deal and Its Terms
Trump confirmed the agreement on Truth Social, announcing the toll-free reopening of the Strait of Hormuz and the immediate removal of the US naval blockade. “The Deal with the Islamic Republic of Iran is now complete. Congratulations to all!” he wrote. In a separate post, he added, “Ships of the World, start your engines. Let the oil flow!”
Iran’s Deputy Foreign Minister Kazem Gharibabadi confirmed the deal on state television, saying the halt to military operations would take effect immediately. He outlined a 60-day follow-on negotiation period contingent on the US fulfilling its commitments, including ending hostilities, lifting the naval blockade, and releasing frozen Iranian assets. Tehran, he said, reserved the right to respond if the other side breached the terms. Iran’s Supreme National Security Council echoed that stance, stating final negotiations would not begin until the US met its obligations under the memorandum.
Iran’s semi-official Mehr news agency published what it described as a 14-point draft memorandum of understanding, though neither government officially confirmed the document’s details. According to Mehr, the draft calls for a complete lifting of the naval blockade within 30 days, the suspension of sanctions on Iranian oil and energy exports, the release of $24 billion in frozen Iranian assets during the 60-day negotiating window, and a final agreement on nuclear issues within that same period. Mehr also reported that discussions on Iran’s missile programme and its support for resistance groups had been removed from the agenda entirely, and that any final agreement would be approved by a UN Security Council resolution.
Notably, the deal does not appear to directly resolve Iran’s nuclear programme; those negotiations are to be taken up in the 60-day follow-on talks. Vice President JD Vance said that Iran never possessing a nuclear weapon was “built into this agreement” and that the US would be able to verify compliance. Vance also credited Trump’s diplomacy with Gulf states and regional partners for bringing about the deal, saying it could usher in “a new era” for the Middle East.
Pakistan’s Role and Regional Diplomacy
Pakistan played a central role in brokering the agreement. Army Chief Field Marshal Asim Munir travelled to Tehran twice in May for in-person talks with senior Iranian officials. Pakistan worked alongside Turkey and Egypt as additional channels for indirect exchanges between US special envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi. Sharif thanked Qatar for its support and singled out Saudi Arabia and Turkey for their contributions.
A Qatari delegation arrived in Tehran on Sunday amid last-minute talks before the announcement, and Qatar’s Ministry of Foreign Affairs called the memorandum of understanding an important step toward sustainable peace and economic growth. European leaders, including those of the UK, France, Germany, and Italy, issued a joint statement saying they would work with the US, Iran, and regional partners to “seize this moment.”
Republican Senator Lindsey Graham publicly questioned Pakistan’s role, citing unverified claims that Iranian military aircraft had been sheltered at Pakistani bases. Iran’s embassy in Turkey struck a different tone, posting “Welcome to the Middle East of a new era” after the announcement.
The Lebanon Complication
The deal’s durability faces an early test over Lebanon. Iran had insisted throughout negotiations that any agreement must cover all fronts, including Lebanon. On Sunday, Israel carried out an airstrike on Beirut’s southern Dahiyeh district, killing three people and injuring six, targeting what it described as senior Hezbollah commanders after Hezbollah fired into northern Israel. Trump was reportedly furious at Israeli Prime Minister Benjamin Netanyahu for ordering the strikes, telling the Wall Street Journal he believed they could torpedo the nearly completed deal. Iran’s foreign ministry said it held the US responsible for the Israeli action. Israel is not party to the US-Iran agreement and has stated it will continue striking Hezbollah.
Markets Surge as Strait of Hormuz Prepares to Reopen
Financial markets responded sharply to the peace deal announcement. Brent crude fell more than 4 percent on Monday to around $83.81 to $84 per barrel, its lowest level since March, having peaked at roughly $120 a barrel during the war from about $70 before hostilities began. US-traded oil dropped 4.7 percent to $80.89. Japan’s Nikkei 225 surged approximately 4.3 to 4.5 percent, South Korea’s Kospi jumped roughly 5.7 percent, and Australia’s ASX 200 rose about 1.5 percent. India’s Nifty 50 climbed 1.53 percent and the BSE Sensex gained 1.59 percent at the open. S&P 500 futures rose about 1 percent and Nasdaq futures gained about 1.6 percent.
“The fall in oil prices will provide some relief for central banks around the world who were worried about the inflation outlook,” said Khoon Goh of ANZ Research.
Energy analysts cautioned against expecting an immediate return to normal shipping through the Strait of Hormuz, which under normal conditions carries about 20 percent of the world’s oil and liquefied natural gas. Andrew Lipow of Lipow Oil Associates noted that mines would need to be cleared before shipping resumes, a process that could take weeks or as long as six months. Vandana Hari of Vanda Insights warned that the lack of specific detail in what has been agreed was “likely to inject unease and uncertainty into the market.”
Analysts also noted a strategic shift: Iran has effectively become the gatekeeper of the Strait of Hormuz as a result of the conflict, giving Tehran durable economic leverage it did not hold before the war began. Pentagon officials told Congress that more than 80 percent of Iran’s missile, drone, and naval defence industrial base had been destroyed or damaged during the fighting.
