US and Iran Electronically Sign MoU to End War, Reopen Strait of Hormuz

The US and Iran have electronically signed the Islamabad Memorandum of Understanding to end their war, and the agreement is now officially in effect. According to officials, the deal triggers the immediate reopening of the Strait of Hormuz and the unwinding of the US naval blockade on Iranian ports.

What was signed

The 14-point Islamabad MoU was signed remotely by President Donald Trump and Iranian President Masoud Pezeshkian, with Trump putting pen to paper at the Palace of Versailles after the G7 summit and Pezeshkian signing in Tehran. Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf had already signed earlier in the week.

Iran’s Foreign Ministry confirmed the agreement is in force, with spokesperson Esmaeil Baghaei saying the text was finalized and implementation has begun. Pakistan brokered the deal, with Qatar, Saudi Arabia, Turkey, and Egypt assisting.

The terms that matter for markets

The MoU declares an immediate and permanent end to military operations on all fronts, including Lebanon. The US will begin removing its naval blockade immediately and fully end it within 30 days, while Iran reopens the Strait of Hormuz to commercial vessels with no charge for 60 days.

The agreement also paves the way for sanctions relief and a reported $300 billion reconstruction fund for Iran, contingent on a final deal. The hardest issue, Iran’s nuclear program, is pushed into a 60-day negotiation window, with a “minimum methodology” for down-blending highly enriched uranium under IAEA supervision.

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The catches

Both sides have stressed this is a framework, not a final settlement. It only becomes a binding deal at the end of the 60-day negotiation period, to be endorsed by a UN Security Council resolution.

Israel has said it is not bound by the agreement, with Prime Minister Benjamin Netanyahu vowing to preserve freedom of action against Hezbollah, and Israeli forces remaining in southern Lebanon. There is also domestic political pushback in the US, with some Republicans arguing Iran is being treated leniently and Democrats criticizing the terms.

Options market and stocks to watch

A reopened Strait of Hormuz and a ceasefire framework typically pressure the war-risk premium baked into oil and defense names. Watch the following:

• XOM and CVX: watch for crude price reaction as Hormuz traffic resumes; lower geopolitical premium could weigh on integrated majors.
• USO: the cleanest read on crude tape risk if shipping flows normalize over the next 30 to 60 days.
• LMT and RTX: watch defense names for a fade if traders price in de-escalation, though the 60-day window leaves re-escalation risk on the table.
• ZIM: shipping and tanker names are directly exposed to Hormuz transit and blockade removal headlines.
• SPY: broad risk-on tone possible if the ceasefire holds, but watch for headline whiplash from Israel-Lebanon flare-ups.

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