The United States and Iran have reached a preliminary agreement to extend their fragile ceasefire by 60 days and begin formal negotiations on Iran’s nuclear programme, according to an Axios report published Thursday. Vice President JD Vance said the US had made “a lot of progress” in talks with Tehran and believed Iran was negotiating “in good faith.” The proposal, described as a memorandum of understanding, still requires President Donald Trump’s final sign-off — and Trump has not yet confirmed whether he will accept it.
The development came hours after Iran targeted a US air base in Kuwait with retaliatory strikes, following American operations against what Washington described as an Iranian drone operation. Iran’s state media claimed an aircraft was destroyed near Bushehr, a charge a US official told Reuters was inaccurate — no American aircraft was shot down near the city. US Central Command confirmed all US air assets were accounted for. Earlier in the day, US strikes hit Iranian positions near Bandar Abbas, according to regional security sources, in one of the most significant exchanges since the April ceasefire took effect.
Oil prices reversed sharply on news of the potential deal, slipping as markets weighed the prospect of a prolonged de-escalation after weeks of escalating tensions that briefly pushed Brent crude past $104 per barrel. The conflict has killed thousands and disrupted shipping through the Strait of Hormuz, through which roughly one-fifth of global oil consumption passes. Chinese supertankers were observed exiting the waterway in recent days, reflecting heightened commercial anxiety over the route’s safety.
Among the disputes still blocking a permanent truce: Iran’s missile programme, uranium enrichment levels, and control over the Strait of Hormuz itself. Qatar’s Emir Sheikh Tamim held a phone call with Trump and stressed dialogue and diplomacy to end the West Asia conflict. The new sanctions announced by the Treasury Department Thursday added further friction ahead of Trump’s decision. The White House separately rejected an Iranian state media report claiming a draft peace memorandum had been agreed as “a complete fabrication.”
Simultaneously, Israel has pressed ahead with its campaign against Hezbollah in Lebanon, where at least 31 people were killed in a single day of Israeli strikes this week — among the deadliest since the April ceasefire collapsed. Israeli ground forces have pushed north of the Yellow Line, the self-declared boundary drawn after the 2006 war. Hezbollah’s secretary-general warned the group had entered a “new and different” phase of combat, suggesting it retains the capacity to strike deeper into Israeli territory. Rubio has urged both sides toward separate diplomatic tracks, even as the US-Iran negotiations continue in Doha.
The competing dynamics — US-Iran diplomacy, Israeli operations in Lebanon, and the looming threat to Hormuz — have produced deep uncertainty in oil markets. Analysts say any breakdown in the ceasefire extension would likely push Brent back above $110 per barrel. For now, markets are watching Trump’s desk closely for a signature that would confirm whether the world’s most strategic waterway remains open to commercial traffic for another two months.
