US and Iran Sign Memorandum of Understanding
On June 17, 2026, United States President Donald Trump and Iranian President Masoud Pezeshkian electronically signed a 14-point Memorandum of Understanding (MOU). The document declares an immediate and permanent termination of military operations on all fronts, including in Lebanon.
Strait of Hormuz Provisions
The agreement calls for the immediate reopening of the Strait of Hormuz for commercial shipping. Under the MOU, Iran is required to ensure toll-free passage for commercial vessels through the strait for at least 60 days, with full restoration of traffic within 30 days.
Iran's chief negotiator, Mohammad Bagher Ghalibaf, stated that Tehran intends to charge ships for using the Strait of Hormuz after the initial fee-free period. He asserted Iran's sovereignty over the waterway.
In contrast, United States Vice President JD Vance stated on June 15 that the United States expects the Strait of Hormuz to be open in a toll-free way for the long term.
Sanctions Relief and Reconstruction Package
The MOU includes provisions for sanctions relief on Iranian oil exports. The agreement also outlines a $300 billion package for Iran's postwar reconstruction, contingent upon reaching a final deal.
United States officials, including President Trump and Vice President Vance, indicated that both the sanctions relief and the release of Iranian assets are dependent on Iran's implementation of the agreement.
Nuclear Program Commitments
The agreement commits both nations to a 60-day negotiation period to reach a final deal on issues including Iran's nuclear program. As part of this commitment, Iran has agreed to abandon the pursuit of nuclear weapons and dilute its stockpile of highly enriched uranium.
According to reports from June 2026, the International Atomic Energy Agency (IAEA) welcomed the MOU and offered to assist with verification of Iran's nuclear program.
Military Withdrawals
The MOU includes commitments for the withdrawal of United States forces from Iran's vicinity within 30 days after a final deal is reached. Mediator Pakistan's Prime Minister Shehbaz Sharif confirmed that the deal would take immediate effect.
Regional Tensions and Disagreements
While the MOU calls for an end to military operations in Lebanon, Israel's military announced new strikes against Hezbollah targets. The Israeli forces stated their presence would remain in southern Lebanon.
Iran has indicated that the continued presence of Israeli forces in Lebanon would be considered a violation of the deal. Iranian Deputy Foreign Minister Saeed Khatibzadeh emphasized that the United States must ensure Israel's compliance with the MOU.
United States Vice President JD Vance stated that the US can adjust relief measures based on Iran's conduct and warned Israeli officials against criticizing the deal.
Economic Impact Analysis
The International Energy Agency characterized prior hostilities, including the closure of the Strait of Hormuz, as the largest supply disruption in the history of the global oil market. The agency noted these events led to significant economic damage and surging oil prices.
Mohamed A El-Erian wrote in the Bangkok Post on June 20, 2026, that he described the MOU as an important step forward and a much-needed foundation for diplomacy. He stated the memorandum could reverse what he called the stagflationary spillovers of the war.
Public Approval
United States President Donald Trump cited a poll indicating 56 percent public approval for the agreement, calling it very popular.
International Reactions
The United Nations Secretary-General welcomed the agreement as a significant step towards regional stability. European Commission President Ursula von der Leyen and British Prime Minister Keir Starmer also expressed support for the deal.