US and Iran agree on peace deal to end war, Trump and Pakistan say

The US and Iran have agreed on a deal to end their four-month war, as both sides announced the withdrawal of troops from all sectors, including Lebanon, Pakistan’s Prime Minister Shehbaz Sharif said on Sunday.

“After intensive discussions, we are pleased to announce that the Peace Agreement between the United States of America and the Islamic Republic of Iran has been ACHIEVED,” Sharif said in a post X. Pakistan acted as a mediator between the two countries.

“The official signing ceremony will be held on Friday, June 19 in Switzerland,” said Sharif.

US President Donald Trump confirmed that an agreement had been reached after the Prime Minister’s announcement. In Truth Social, the president said: “The deal with the Islamic Republic of Iran is now over.”

“I hereby fully authorize the free opening of the Strait of Hormuz, and, at the same time, I authorize the immediate removal of the United States Naval blockade,” Trump wrote.

Trump, in a recent post, said the strait would be opened on Friday.

“With the opening of the Strait when the Agreement was signed on Friday, with the aim of removing the mine, oil will flow from both ends and to the Region, and to the world!” he said.

The Associated Press reported that Iranian state media broadcast a television banner that read: “The US was forced to sign an agreement to end the war.”

Iranian state TV also said Iran’s Foreign Ministry holds the US and Israel “to blame for the dangerous consequences of ongoing insecurity and tension in the region.”

Qatar’s Ministry of Foreign Affairs said in a statement that it welcomes the agreement, which includes measures to ensure freedom of movement in the Strait of Hormuz. Qatar “considers it an important step in consolidating stable peace and promoting economic growth in the region and around the world,” he said.

On Friday, Iranian state media reported that a 14-page memorandum had been drawn up, outlining the terms of a proposed peace deal that would include the US lifting oil sanctions and Iran committing to reopening the Strait of Hormuz within 30 days.

The agreement follows weeks of mixed messages from Washington and Tehran about the origins of the conflict, and a fragile ceasefire in place as efforts are made to end the war.

The deal was put in jeopardy early Sunday after the Israel Defense Forces said Iran-backed Lebanon’s Hezbollah launched bombs into Israel. Subsequent Israeli strikes on Beirut drew condemnation from Trump, who warned Iran and Hezbollah not to retaliate.

Trump called on both sides to “not hit it off.”

The Strait of Hormuz, a key shipping lane in the Middle East, has been effectively closed since the conflict began in late February. The blockage of the waterway has created severe supply constraints for a variety of commodities, including oil, gas and fertilizers, raising prices and fueling concerns about the return of stagflation.

Inflation has already started to rise in many major economies, with the US inflation rate reaching 4.2% in May – the highest level in three years.

US Vice President JD Vance, in an interview with Fox News shortly after the deal was signed, said the deal was “a big deal for the American people.”

“I know they are suffering from high gas prices, the President is very concerned about that fact,” said Vance. “What we will be able to do is reduce energy costs, not now but in the long term.”

On Thursday, the European Central Bank announced a quarterly rate hike, raising interest rates for the first time since 2023 as the war in Iran continues to fuel inflation in the euro zone.

The move made the ECB the first major central bank in the world to raise its key interest rate in response to the energy shock.

Market expectations have changed over the course of the war, with expectations of widespread deflation fading and being replaced by much higher interest rates in the economy as a whole.

The Federal Reserve is now expected to raise interest rates before the end of this year, according to CME’s FedWatch tool.