Iran said on Wednesday it was reviewing a U.S. peace proposal that sources indicated would formally end the ongoing war, while leaving unresolved Washington’s key demands that Tehran suspend its nuclear programme and reopen the Strait of Hormuz. An Iranian foreign ministry spokesperson cited by the ISNA news agency said Tehran would convey its response. U.S. President Donald Trump, meanwhile, expressed cautious optimism, saying he believed Iran wanted an agreement.
Trump signals possible deal, alternates between optimism and warning
"They want to make a deal. We've had very good talks over the last 24 hours, and it's very possible that we'll make a deal," Trump told reporters in the Oval Office on Wednesday.
However, earlier in the day, Trump struck a more sceptical tone. In a Truth Social post, he threatened to restart the U.S. bombing campaign in Iran and described the possibility of Tehran agreeing to the latest U.S. proposal as a "big assumption."
Trump has repeatedly projected confidence in securing an agreement to end the war that began on February 28, but without success so far. Major sticking points remain Iran’s nuclear programme and control over the Strait of Hormuz, a critical energy route that before the conflict handled nearly one-fifth of global oil and gas shipments.
Proposal details and competing positions
A Pakistani source and another source briefed on mediation efforts said an agreement was close on a one-page memorandum intended to formally end the conflict. The arrangement would initiate talks on reopening shipping through the Strait of Hormuz, lifting U.S. sanctions on Iran, and imposing limits on Iran’s nuclear programme.
It was unclear how this proposed memorandum differs from a 14-point plan Iran presented last week, and Tehran has yet to formally respond to the latest U.S. proposal.
Iranian lawmaker Ebrahim Rezaei, spokesperson for parliament’s foreign policy and national security committee, dismissed the text, describing it as "more of an American wish-list than a reality."
Parliament speaker Mohammad Baqer Qalibaf also mocked reports suggesting progress, writing on social media in English that "Operation Trust Me Bro failed." He said such claims were U.S. spin following its failure to open the Strait of Hormuz to shipping traffic.
Markets react to ceasefire optimism
Reports of a potential agreement triggered a sharp reaction in global markets. Oil prices fell to two-week lows, with Brent crude futures dropping around 11% to near $98 a barrel before recovering above the $100 mark. Global equities rose and bond yields declined amid optimism over a possible end to the conflict, which has disrupted energy supplies.
Military developments and regional pressure
Trump on Tuesday paused a two-day-old naval mission aimed at reopening the blockaded Strait of Hormuz, citing progress in peace talks. NBC News reported that the decision followed Saudi Arabia’s suspension of U.S. access to a base needed for the operation, a move that reportedly surprised and angered Riyadh.
Saudi officials also objected to U.S. plans to escort ships through the strait, reportedly telling Washington they would deny permission for military flights from Saudi bases or through its airspace. A call between Trump and Saudi Crown Prince Mohammed bin Salman reportedly failed to resolve the issue. The White House did not immediately respond to requests for comment.
The U.S. military has continued its blockade operations in the region. U.S. Central Command said forces fired at an unladen Iranian-flagged tanker on Wednesday, disabling the vessel as it attempted to sail toward an Iranian port in violation of the blockade.
Negotiation framework and outstanding gaps
According to a source briefed on the mediation, negotiations are being led by Trump envoy Steve Witkoff and son-in-law Jared Kushner. If the preliminary memorandum is agreed upon, it would trigger 30 days of detailed talks toward a comprehensive settlement.
The full agreement under discussion would aim to end competing U.S. and Iranian restrictions on the Strait of Hormuz, lift U.S. sanctions, release frozen Iranian funds, and impose limits on Iran’s nuclear programme.
However, the sources did not mention several long-standing U.S. demands, including curbs on Iran’s missile programme and an end to its support for regional proxy groups—issues Tehran has consistently rejected. There was also no reference to Iran’s stockpile of more than 400 kg of near-weapons-grade uranium.
Israeli Prime Minister Benjamin Netanyahu, a close U.S. ally on Iran policy, said on Wednesday that he and Trump agreed all enriched uranium must be removed from Iran to prevent nuclear weapon development.
Tehran, however, continues to deny any intention of developing nuclear weapons.