U.S. and Iran agree on peace deal to end the war, Trump and Pakistan say

Pakistani Prime Minister Shehbaz Sharif said on Sunday that the United States and Iran have agreed on a deal to end their nearly four-month-old war, with both sides declaring an immediate and permanent end to military operations on all fronts, including Lebanon.

“After intense negotiations, we are happy to announce that the Peace Agreement between the United States of America and the Islamic Republic of Iran has been REACHED,” Sharif said. Publish on X. Pakistan acted as a mediator between the two countries.

“The official signing ceremony will be held in Switzerland on Friday, June 19,” Şerif said.

US President Donald Trump confirmed that the agreement had been reached immediately after the prime minister’s statement. One Sharing on Truth SocialThe President said: “The agreement with the Islamic Republic of Iran is now complete.”

“I authorize the free opening of the Strait of Hormuz, and I also authorize the immediate lifting of the US naval blockade,” Trump said.

On Friday, Iranian state media reported that a 14-page draft memorandum had been prepared outlining the terms of the proposed peace deal, which would include the US lifting oil sanctions and Iran committing to reopen the Strait of Hormuz within 30 days.

The agreement came after weeks of mixed messages from Washington and Tehran regarding the course of the war; A fragile ceasefire was reached while diplomatic efforts were made to end the war.

The deal was put at risk early Sunday after Israel and Iran-backed Hezbollah staged a coup in Lebanon. Israel’s attacks in Beirut drew condemnation from Trump, who warned Iran and Hezbollah not to respond.

Trump asked both sides to “not screw it up.”

The Strait of Hormuz, a critical shipping route in the Middle East, has been effectively closed since hostilities began in late February. The blockade of the waterway has created severe supply constraints for a variety of goods, including oil, gas and fertilizer, leading to price increases and raising concerns of a return to stagflation.

Inflation has already begun to rise in many major economies; America’s annual inflation rate reached 4.2% in May, the highest level in the last three years.

US Vice President J.D. Vance said in an interview with Fox News immediately after the agreement was signed that the agreement was “a great thing for the American people.”

“I know they’re suffering from high gas prices, and the President is certainly very concerned about that,” Vance said. “What we can do is lower the cost of energy, not just now but over the long term.”

On Thursday, the European Central Bank announced a quarter-point hike, raising interest rates for the first time since 2023 as the Iran war continues to push euro zone inflation out of target.

The move made the ECB the first major global central bank to raise interest rates in response to the energy shock.

Market expectations changed throughout the war; General interest rate cut expectations have diminished and been replaced by higher interest rate environments for longer periods of time across economies.

According to CME, the Fed is expected to raise interest rates before the end of this year. FedWatch tool.