The United States (US) and Iran have agreed to the comprehensive wording of a draft peace deal, mediated by Pakistan, which aims to permanently terminate all military operations, including securing a ceasefire in Lebanon. Under the core terms of this emerging agreement, Iran commits to freezing its nuclear weapons programme with the ultimate goal of destroying its enriched uranium stockpile and dismantling its nuclear capabilities.

In exchange, the US is expected to release approximately $25 billion in frozen Iranian assets and issue Treasury Department waivers allowing the export of Iranian crude oil, petrochemicals, and related banking and insurance services. The deal also outlines the reopening of the strategic Strait of Hormuz for toll-free international shipping, following the removal of the US naval blockade, although Iran is still expected to negotiate service fees along the transit route.

The agreement marks a major step towards stabilising the Middle East, but the final scope, timeline and sequencing of implementation remain subject to technical negotiations ahead of the formal signing.

Markets have already responded strongly. Crude oil prices fell sharply after the deal was announced, with WTI down about 4.7% to near $80.87, while Brent slipped about 4.1% to below $84 as investors began removing some of the geopolitical risk premium that had built into energy prices. The reopening of the Strait of Hormuz is central to this move, given the route’s importance to global oil and gas flows.

The relief has also spread into broader financial markets. Global equities futures moved higher as investors have started to price in lower energy costs, suggesting lower global inflation pressures and a lower risk of further military escalation. For oil-importing economies like South Africa, the decline in crude prices is particularly important because it eases pressure on fuel costs, inflation expectations and central bank policy.

The rand strengthened to near R16.15 against the dollar, from around R16.50 a week earlier, supported by improved market sentiment as investors moved back into emerging-market assets.