The interim deal reached by the United States and Iran to end their war will reopen the Strait of Hormuz and bring the two adversaries back to the negotiating table over Tehran’s nuclear program. It will also give Iran an immediate gain, allowing it to sell its oil freely again, according to a text of the accord provided by US officials.
Besides the new oil revenue for Iran, the two sides are more or less back where they were three-and-a-half months ago — before Israel and the US on February 28 launched their war on Iran, which has left thousands dead across the region, triggered a global energy crisis and shaken the American economy.
Iran and the US will enter a 60-day period of negotiations, and hanging over them will be the question of whether US President Donald Trump can wrest a better deal than the 2015 nuclear accord he scuttled eight years ago.
Here’s what to know based on the US text, which hasn't been confirmed by Iran:
The interim deal would get the oil flowing again
Once the deal is signed, expected Friday, the Strait of Hormuz will reopen and the US will lift its blockade of Iranian ports, which should push gas prices down.
Iran’s closure of the strait, through which around a fifth of the world’s oil supplies must pass to reach markets, proved perhaps its strongest weapon. It drove up global fuel prices, made food and other basics like fertilizer more expensive, and helped push US inflation to 4% ahead of this fall's midterm elections.
Iran will be able to sell oil freely
The deal immediately waives sanctions that Trump imposed on Iran’s oil exports, allowing it once again sell its crude on the world market and restoring a revenue stream worth billions.
Last year, Iran earned an estimated $45 billion from oil sales. But it had only one major buyer, China, and had to ship its crude through a shadow fleet of tankers to elude sanctions, eating into its profits. Under the blockade since April, its exports have nearly ground to a halt.
With the waiver, Iran will likely be able to find more customers and sell its oil for higher market prices.
Iran got promises for the future
Trump withdrew from the previous nuclear deal in 2018, saying it gave a huge windfall to Iran. But the interim deal outlines even more lucrative incentives for Iran if it reaches a new agreement with the US on its nuclear program.
One is the eventual lifting of all international sanctions, which would seem to go further than the 2015 accord. That agreement lifted sanctions related to Iran’s nuclear program but kept others in place over what the US alleged were Tehran's support for terrorism and rights abuses.
The interim pact also promises a US$300 billion fund for reconstruction of Iran’s war damage. US Vice President JD Vance has said Gulf Arab nations would provide the funds as investments. Trump reiterated Wednesday that the US would not contribute.
To give a sense of the extraordinary scale of the fund, the World Bank estimates that Syria, after 13 years of destructive civil war, needs US$215 billion (NZ$370 billion) for reconstruction; the Gaza Strip, largely flattened in two years of war between Israel and Hamas, needs US$53 billion (NZ$91 billion).
The deal also promises to unfreeze billions of dollars worth of Iranian assets held abroad during the negotiations under a procedure the two sides will work out, according to the text provided by US officials.
Iran's missiles and proxies don't seem to be on the table
The Trump administration said its war aims were to “obliterate” Iran's missile arsenal, “sever its support” for proxies in the region, "annihilate its navy" and ensure it never acquires a nuclear weapon.
The seven weeks of US-Israeli bombardment are believed to have heavily damaged Iran’s missile arsenal and production facilities as well as other parts of its military. How heavily isn't known, though, and Iran continued to fire on Israel as recently as last week. Meanwhile, Iran’s ties with its militant proxies — Hezbollah in Lebanon, the Houthis in Yemen and Shiite militias in Iraq — appear strong as ever.
Neither the missile issue nor Iran’s support for its allies appears to be on the table in the upcoming negotiations. The interim deal only specifies that the talks will focus on Iran’s nuclear program.
War in Lebanon could threaten the deal
The deal calls for an end to the war in Lebanon, where Israel has been fighting Hezbollah.
But Israel and Hezbollah aren't parties to the agreement. Iran insists Israel must withdraw from the large swath of southern Lebanon it has occupied since March, though the interim deal doesn't explicitly require that.
Israel has vowed to keep its troops in the zone, while Hezbollah says it is committed to resisting Israel "until full withdrawal is achieved". If fighting spirals, it could derail the US-Iran deal unless the two countries can rein in their respective allies.
US-Israeli ties have been strained
Israel was squeezed out of the negotiations with Iran, and Israelis from across the political spectrum have called the deal a disaster, directing their fury at Prime Minister Benjamin Netanyahu.
Trump, meanwhile, has grown more scathing in his displeasure with Netanyahu, even describing him as "crazy". During the negotiations with Iran, Trump was furious over Israel’s strikes in Beirut, warning they could jeopardise an agreement.
In France on Tuesday, Trump said at the annual G7 summit that "without the US, there would be no Israel," and added that Netanyahu "has to be more responsible with respect to Lebanon".
Netanyahu is left in a precarious situation ahead of national elections later this year. His relationship with Trump may require downscaling a military campaign in Lebanon that is widely popular in Israel.
Meanwhile, Israel's arch-nemesis, Iran, would emerge from the war seemingly bolder.
It survived the most serious attempt ever by Israel and the United States to topple the Islamic Republic, despite their thundering opening volleys of the war that killed Iran’s supreme leader and other top officials. And Iran demonstrated its ability to retaliate economically by shutting down the strait and striking U.S. Arab allies in the Gulf, giving Tehran confidence that Trump won't seek a return to war.
Much depends on the final agreement
The 2015 agreement negotiated by the Obama administration severely limited Iran’s nuclear program for 15 years. During that period, Iran could only enrich uranium to a low level, 3.67%, which is far below the 90% needed for a weapon. It could only stockpile 300 kilograms of the material and had to sharply reduce its centrifuges carrying out enrichment. It was also put under stricter inspections by the UN's nuclear watchdog agency.
One main criticism was the 15-year time limit, after which opponents said Iran would be able to quickly ramp up its ability to produce a bomb.
A key question now will be whether the U.S. can win stricter limits on Iran’s program for a longer term. The United States wants Iran to give up or dilute its stockpile of highly enriched uranium, which Iran developed in retaliation after Trump pulled out of the 2015 accord.
Even if Iran agrees to that, it is almost certain to demand the right to rebuild its enrichment program at lower levels, for what it insists are peaceful purposes.
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