US, Iran prepare for deal signing as financial details emerge

[WASHINGTON/LONDON] The US and Iran are preparing to formally sign an interim peace deal that’s left both sides claiming victory, with details of the accord still emerging and energy insiders sceptical of how fast it can reopen the Strait of Hormuz.

The text of the so-called memorandum of understanding (MOU), which opens the way to two months of negotiations on Iran’s nuclear programme and other issues, has yet to be published. A near-final draft seen by Bloomberg News shows Iran set to receive sanctions waivers that allow it to sell oil immediately, with other financial incentives deferred.

A US official said that the full accord may be published in the next two days ahead of a signing ceremony. That event is scheduled to take place in the Bürgenstock, a mountain resort overlooking Lake Lucerne, the Swiss foreign ministry said on Tuesday (Jun 16).

Vice-President JD Vance is expected to head the American delegation, while Iran will likely be represented by Parliament Speaker Mohammad Bagher Ghalibaf.

US President Donald Trump is in France for a Group of Seven summit, where the Iran war, which has caused energy prices to soar, is featuring prominently. European nations such as France, the UK and Italy are ready to help clear the strait of mines if needed, though they are wary of potential risks to their ships and sceptical that Hormuz can fully re-open by Friday as Trump has promised.

Speaking at the summit on Tuesday, Trump said that the agreement is a “done deal” that will prevent Iran from developing nuclear weapons, adding that the US would not pay war reparations or invest money in Iran. “They are going to have to prove themselves, I think, before any of us go in there,” he said.

Trump also held talks on Tuesday with United Arab Emirates President Sheikh Mohamed bin Zayed and Qatar’s Emir Sheikh Tamim bin Hamad. Those countries may play a part in helping create, along with the US, a US$300 billion development fund for Iran in the aftermath of the conflict.

The draft seen by Bloomberg says the US and its regional partners would create a plan to provide that amount in financing for Iran’s rehabilitation and economic development.

The US will look to other countries and the private sector to pledge investments, the American official said. Iran says the war, which began on Feb 28 with a US-Israeli bombardment, cost it more than US$250 billion in economic damage.

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Iranian officials have said that the MOU will lead to them getting access to tens of billions of US dollars of frozen funds held in places such as Qatar. The draft seen by Bloomberg says the US undertakes that those funds “will be released and made fully available” without setting a timeline.

Oil prices have fallen sharply since Trump said late last week that an agreement was imminent. Brent crude dropped below US$80 on Tuesday, falling for a fourth straight day and down from a high of US$125 in late April.

Lower demand in China, as well as the US and other nations running down their emergency petroleum stockpiles, have also helped lower prices. Those reserves will likely need to be rebuilt once the Hormuz strait is open again.

Many European governments, energy investors and shipping companies have reservations about how fast the strait, through which a significant portion of the world’s supplies of oil, liquefied natural gas and aluminium normally flow, can be returned to pre-war conditions.

Beyond the potential need to clear the waterway, there’s a longer-run question of whether Iran will allow free passage.

Teheran has signalled it will charge vessels navigation fees after the 60-day period of the fresh US-Iran negotiations.

Trump said on Tuesday at his meeting with the UAE leader that the strait would be “permanently” open, toll-free. A day earlier, a senior US official told reporters that the strait’s status beyond the 60-day negotiating period would be up for discussion.

Vance defended the deal on Monday, claiming the pact will build around a verification system to ensure Iran follows through on its pledges. Senate Republicans said they are pressing the Trump administration for details and signalled Congress will ultimately vote on the final agreement.

Neither the US nor Iran is hiding its distrust of the other. The White House says Trump will not hesitate to return to strikes if he thinks Teheran’s leaders aren’t abiding by the deal’s terms. Iranian officials have warned that the US twice launched attacks on the country during the past year while negotiations were underway.

Trump’s frustration with the war he launched nearly four months ago has been increasingly visible and his focus has often drifted elsewhere, including to his renovation projects in Washington and festivities surrounding the 250th anniversary of US independence.

The president, who turned 80 on Sunday, looked tired when he arrived at the G7 on Monday. He travelled only after attending a mixed martial arts fight at the White House that ended well after midnight in the US.

Israel’s war against Iran-backed Hizbollah militants in Lebanon is another potential spoiler to a successful deal. The MOU is likely to state there must be a ceasefire on “all fronts”, including Lebanon.

Ghalibaf said in a call with Lebanese officials that Israel “must withdraw from occupied territories”, Iran’s Mehr news agency reported on Tuesday.

Israeli politicians have called for continuing the fight against Hizbollah, which has fired missiles and drones on their territory in support of Iran. BLOOMBERG