Story Highlights
- Trump canceled further strikes on Iran Thursday and said a peace deal is “imminent,” reversing earlier threats of major military action
- Pakistan announced a “final, agreed upon text” of the peace deal has been reached as of June 12
- Oil prices fell more than 3% and U.S. stock futures rose on news of a potential breakthrough, with S&P 500 futures up 0.6%
What Happened
President Donald Trump delivered a series of whiplash statements on Thursday that left both allies and adversaries scrambling to interpret Washington’s intentions toward Iran. In the early morning, Trump posted on Truth Social that the U.S. would strike Iran “VERY HARD TONIGHT,” a message that alarmed markets and foreign capitals alike. Almost simultaneously, he told Fox News that negotiations between the two sides were still active. Within hours, Trump reversed course entirely, announcing he was canceling further strikes and that a peace agreement was imminent.
The rapid reversal came after weeks of escalating military operations. The U.S. joined Israel in striking Iran in late February, launching what became a prolonged military engagement affecting the broader Middle East. Iran responded by effectively shutting down the Strait of Hormuz, the narrow waterway through which approximately 20% of the world’s energy supply flows, creating severe disruptions to global oil markets and supply chains.
Iranian Foreign Minister Abbas Araghchi said Friday that a Memorandum of Understanding between the U.S. and Iran had “never been closer,” while urging media not to speculate about its specific contents. Trump, for his part, criticized Iranian media for reporting on the deal’s elements before it was finalized, pushing back at reports he said were inaccurate or premature.
Pakistan, which has played an increasingly prominent diplomatic role as a neutral mediator between Washington and Tehran, announced Friday morning that a final, agreed-upon text of the peace agreement had been reached. No formal confirmation came from the U.S. State Department or Iranian government in the immediate hours following that announcement. Trump also said Thursday that Israel “will not withdraw from security zones in Lebanon, Syria, and Gaza” under any deal’s terms, adding a significant caveat that Iran had previously objected to.
Earlier in the day, Trump had floated the idea of seizing Kharg Island, Iran’s critical oil export hub, saying the U.S. would take “total control” of Iran’s oil and gas industry “at some point in the not too distant future.” He later walked back that specific threat, though the comment rattled diplomats working to finalize a framework.
Why It Matters
The potential end of the Iran conflict carries enormous stakes for the United States — militarily, economically, and politically. The war, which began in February 2026, has drawn in American forces, strained relations with European allies skeptical of the military approach, and divided opinion within Trump’s own political coalition. Tucker Carlson and other prominent America First voices have loudly condemned the intervention, fracturing the conservative media landscape over foreign policy for the first time in years.
For Americans, the most immediate consequence of any peace deal would be the reopening of the Strait of Hormuz. The strait’s closure has contributed directly to elevated energy prices, with ripple effects across transportation, manufacturing, and household budgets. Every week the strait remains closed adds cost and uncertainty to the global economy, making resolution a pressing domestic as well as foreign policy priority.
The diplomatic credibility implications for Trump are also significant. Having positioned himself as a dealmaker throughout his political career, the president has an obvious interest in claiming a negotiated resolution rather than an inconclusive or prolonged military stalemate. A formal peace agreement — if it holds — would represent one of the most consequential foreign policy outcomes of his second term.
However, the vagueness surrounding the deal’s terms creates serious questions about durability. Iran’s prior insistence that any agreement include Israeli withdrawal from occupied territories remains a core sticking point, and Trump’s statement that Israel will not cede security zones suggests fundamental disagreements have not been fully resolved.
Economic and Global Context
Markets responded immediately to Trump’s Thursday peace signals. Wall Street’s rebound accelerated into Friday morning, with S&P 500 futures rising 0.6% before the opening bell, Dow Jones Industrial Average futures adding 0.7%, and Nasdaq futures climbing 0.5%. Oil prices declined more than 3%, a substantial single-session move reflecting the direct connection between Hormuz tensions and global energy pricing.
The Strait of Hormuz carries roughly 20% of the world’s total energy supply, including a significant portion of liquefied natural gas exports from Gulf states. Its disruption since February has created shortfalls and rerouting costs that affected not just oil markets but downstream industries dependent on stable energy prices. Shipping insurance premiums in the region surged dramatically during the conflict, adding further costs to global trade flows.
For Gulf Arab states, a U.S.-Iran agreement would restore a degree of regional stability that has been absent since February’s strikes began. Saudi Arabia and the UAE, which depend on secure Hormuz transit for their own oil exports, have quietly supported diplomatic efforts even as they maintained public solidarity with U.S. policy positions. Any framework that reopens the strait and reduces Iranian proxy activity would be broadly welcomed across the Gulf Cooperation Council.
Implications
If a formal peace deal is signed in coming days, the political and strategic fallout will play out across multiple arenas. For the Trump administration, a successful conclusion would provide a powerful campaign-trail narrative heading into the 2026 midterm elections — a president who launched military action and then secured peace on terms favorable to American interests. Administration allies have already framed the conflict in those terms.
For Congress, a peace deal would not automatically resolve the ongoing dispute over war powers. Several lawmakers from both parties have questioned whether the February strikes were constitutionally authorized. A deal that ends hostilities could moot those concerns politically even if legal questions remain unresolved, as Congress has historically been reluctant to revisit war powers disputes once active hostilities cease.
For Iran, the question of what it received in exchange for coming to the table is crucial to whether any deal holds domestically. Iranian leadership faces significant internal pressure to show it extracted meaningful concessions from the U.S. The MOU’s specific contents — once released — will determine whether the agreement commands enough internal legitimacy to survive Iran’s factional politics.
The coming days will test whether Pakistan’s announcement of a final text translates into formal signatures and implementation. Previous ceasefire moments in this conflict have collapsed under the weight of new provocations, and both sides retain military assets capable of rapid escalation if political will falters.
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