US President Donald Trump gives a speech in the Oval Office of the White House in Washington, DC, USA on June 11, 2026.
Daniel Heuer | Reuters
Pakistan Prime Minister Shehbaz Sharif said Sunday that the United States and Iran have agreed to a deal to end the nearly four-month war, with both sides declaring an immediate and permanent halt to military operations on all fronts, including in Lebanon.
“I am pleased to announce that, after intensive consultations, a peace agreement has been reached between the United States and the Islamic Republic of Iran,” Sharif said in a post on X, noting that Pakistan has been acting as a mediator between the two countries.
“The formal signing ceremony will take place in Switzerland on Friday, June 19th,” Sharif said.
US President Donald Trump confirmed an agreement had been reached shortly after the prime minister’s announcement. “The agreement with the Islamic Republic of Iran is complete,” the president said in a post on Truth Social.
“I hereby fully authorize the free opening of the Strait of Hormuz, and at the same time authorize the immediate lifting of the U.S. naval blockade,” Trump wrote.
On Friday, Iranian state media reported that a 14-page memorandum of understanding had been drafted outlining the terms of a proposed peace deal, including that the United States lift oil sanctions and Iran commit to reopening the Strait of Hormuz within 30 days.
The agreement follows weeks of mixed messages from both Washington and Tehran over the course of the conflict, as a fragile ceasefire remains in place amid diplomatic efforts to end the war.
The deal was thrown into jeopardy early Sunday when Israel and Iran-backed Hezbollah traded blows in Lebanon. The Israeli military attack in Beirut drew condemnation from President Trump, who warned Iran and Hezbollah not to fight back.
President Trump urged both sides not to “explode.”
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 waterways has severely constrained the supply of a range of goods, including oil, gas and fertilizer, causing price hikes and raising fears of a return to stagflation.
Inflation rates have already begun to rise in many major countries, with annual inflation in the United States reaching 4.2% in May, the highest level in three years.
Vice President J.D. Vance said in an interview on Fox News shortly after the deal was signed that the deal was “a great thing for the American people.”
“We know they’re struggling with high gas prices, and the president is certainly very concerned about that fact,” Vance said. “What we can do is lower energy costs not just now but in the long term.”
The European Central Bank on Thursday announced a quarter-point rate hike, the first rate hike since 2023, as euro zone inflation continues to fall below target due to the Iran war.
The move made the ECB the first major global central bank to raise key interest rates in response to an energy shock.
Market expectations changed through the war, and expectations for widespread interest rate cuts waned, replaced by a prolonged high interest rate environment across economies.
The Fed is expected to raise rates by the end of this year, according to CME’s FedWatch tool.
