Draft US-Iran Accord Promises an Oil Sanctions Waiver, and Crude Prices Fall

A senior Iranian official says negotiators have completed a draft memorandum of understanding with the United States that would waive oil sanctions, release frozen assets and set nuclear limits, with a final agreement to be settled in the 60 days after both sides sign. The terms described to reporters include the release of roughly 25 billion dollars in frozen Iranian funds, the reopening of the Strait of Hormuz to commercial shipping, and the lifting of a United States naval blockade on Iranian ports.

The two governments are presenting the same document very differently. United States officials expressed confidence that the text would be signed on Sunday, and President Donald Trump declared the fighting over. Iranian state media said Tehran had not yet taken a final decision, and each side has released conflicting accounts as it seeks to show the war ended on its own terms. Mediators continued working to finalize the deal against resistance inside Iran, where hardliners object to negotiating under military pressure.

The market reaction was immediate. Brent crude fell to about 87 dollars a barrel on June 12, down roughly 3 percent on the day and around 17 percent over the past month, as traders anticipated the return of blockaded Iranian barrels and an open Strait of Hormuz, the channel through which a large share of seaborne crude moves.

The episode shows how policy, not scarcity, has set the recent price of oil. The higher prices that built up during the closure of the Strait of Hormuz are now easing because of diplomacy rather than new supply. The proposed transfer of frozen reserves is a reminder that sanctions can be reversed as quickly as they are imposed. The durability of any price relief depends on a document that neither government has yet confirmed.