A memorandum of understanding between the United States and Iran to pause hostilities in the Gulf could be signed as early as Sunday in Geneva, according to a Western source cited by Reuters, as negotiators move to finalise language on sanctions relief, regional ceasefire terms and post-conflict arrangements.
The draft, still being refined, is centred on halting fighting across multiple theatres, with Iran insisting that any agreement must also cover Lebanon, where Israel has been engaged in military operations against Hezbollah. The aim is to complete wording by Saturday, paving the way for a signing by U.S. Vice President JD Vance and Iranian Parliament Speaker Mohammed Baqer Qalibaf, though the venue in Geneva remains unconfirmed.
US President Donald Trump said the deal was effectively ready and linked it to a halt in new military action. “We just made a great settlement of the war with Iran,” Trump told reporters at the White House.
He further suggested implementation could come quickly, saying, “The Strait will officially open as soon as we sign, which could be soon, very soon, maybe over the weekend in Europe,” referring to the strategic Strait of Hormuz. Trump also indicated leadership-level backing for the draft, adding, “I understand the answer is yes,” when asked whether Iran’s top authority had approved it.
Key Iranian positioning and draft terms
A senior Iranian source told Reuters that the emerging framework includes wide-ranging concessions, including sanctions relief and unfreezing of Iranian assets. Iran has also tied the agreement to a broader regional ceasefire, including Lebanon, while leaving nuclear negotiations for a later stage. Washington, however, has maintained its long-standing position that Iran must not develop a nuclear weapon, while Tehran insists its programme is peaceful.
Iranian media outlet Mehr News Agency reported that the draft also includes U.S. commitments extending beyond sanctions relief. According to the report, “The United States and its allies must submit plans for Iran’s reconstruction worth at least $300 billion,” marking one of the most expansive financial claims tied to the proposed settlement.
IRNA statements on nuclear, Strait and negotiation scope
IRNA outlined Tehran’s position on key unresolved issues, clarifying that nuclear talks remain outside the immediate framework and will be addressed later.
“Nuclear talks will take place within a 60-day period after signing,” Iran's IRNA said in a statement.
“No agreement is made regarding the nuclear file in the current memorandum," the statement added.
On strategic waterways, IRNA said governance arrangements would remain regional in nature: "The future administration of the strait will be resolved as a regional matter through dialogue and joint decision-making between Tehran and Oman."
It further stressed limitations on any transfer of control: “Under the MoU with US, Iran makes no commitment regarding the transfer of management of the Strait of Hormuz.”
Military tensions and regional fallout
Despite diplomatic momentum, tensions remain elevated around the Strait of Hormuz, with U.S. forces reportedly shooting down two Iranian one-way attack drones targeting commercial shipping. Iranian state media also claimed its military briefly halted a tanker in the same area.
The proposed restrictions on Lebanon-related operations may face resistance from Israel, which has not been included in the negotiations. The office of Israeli Prime Minister Benjamin Netanyahu said Israel is not a party to any memorandum under discussion.
Market reaction and political pressure
Trump’s remarks—made hours after warning of potential escalation—helped calm global markets. Oil prices fell more than 2% in early European trading, while equities rallied on expectations of de-escalation.
The conflict, which escalated in late February after strikes involving U.S. and Israeli forces and subsequent Iranian retaliation, has increasingly become a political liability for the White House, with concerns over energy prices and electoral fallout in upcoming U.S. midterms.
