There is a draft on the table. The two lots of negotiators, American and Iranian, have apparently read the same text and reached, more or less, the same answer it works, for now. Memorandum of understanding agreed to by U.S. and Iranian negotiators to extend ceasefire and to begin negotiations on Iran's nuclear program has been agreed to for 60 days, but hasn't had the final approval of President Trump. Tehran, for its part, has likewise not officially confirmed anything, which is also a kind of sign Not yet ready to celebrate.

The official U.S. presentation of it is calculated and indicative: "This is an agreement to get everybody to the table. We will work out the details in the negotiations. That's diplomatic speak for the fact that the tough talk hasn't taken place. What's been achieved is a package of commitments wide enough to keep both sides on the hook without either side having to bite on a pill they can't swallow politically at home.

The proposed, 60-day agreement includes "unrestricted" shipping through the Strait of Hormuz, for Iran to remove all the mines from the strait within 30 days, and for the US naval blockade to be lifted in stages as commercial shipping returns. The deal also would include an Iranian commitment not to seek nuclear weapons — buttressed by deliberately vague language so it would withstand criticism in Tehran while satisfying Washington's desire to say something tangible.

The actual content of the deal

According to several U.S. officials with knowledge of the terms of the MOU, the architecture of the MOU is designed with an eye to “buy time” instead of resolve the disagreements. Iran will make a pledge not to pursue, produce or acquire nuclear arms and the initial subjects of talks if they are launched officially will be how to dispose of its existing stockpile of enriched uranium and how to restrain future enrichment. US has, for its part, promised to relax sanctions and unfreeze Iranian funds at the end of negotiations. Washington will for 60 days lift some sanctions to enable Iran to sell oil on an unlimited basis.

When the war started, the U.S. and Israel's stated goals included dismantling Iran's nuclear program, curbing its missile program and halting its support for armed proxies. However, soon the world's number one concern was Iran's strangulation of the most important shipping lane, the Strait of Hormuz, which was open to international shipping before the war, with hundreds of vessels trapped in the strait carrying oil, gas, fertilisers and other supplies.

Iran has also agreed in principle to give up its highly enriched uranium, though no commitments have been made on unfreezing Iranian assets, and any sanctions relief will be in keeping with actual delivery on the president's national security goals. That conditionality is an exceptionally important one. It's the difference between a deal that sticks under pressure, and one that breaks down the first time either side feels they've come out ahead.

The two leaders who have to say yes

But there is caution in the optimism emanating from Washington, and there is uncertainty. Vice President Vance was cautious to point out the live issues: On the nuclear part, "There are a couple of things going on: the highly enriched stockpiles and the question of enrichment. So we're continuing to go back and forth with them. We do think they're negotiating in good faith, at least so far.

Vance won't guarantee that any agreement will be made. This comes as an admission of significance. Three months into a war that has already wrought historic damage on global energy markets, US officials know the price of failure, and haven't yet said that success is guaranteed.

Trump was briefed on the details and requested a few days to consider it, while Iranian negotiators had secured internal approval to do so. The Iranian side has not yet given its final nod and the semi-official Iranian state media outlet Tasnim said the MOU text was not even finalized. It's hard to discern from the outside whether this denial is a negotiating stance or a sign of internal differences in Tehran. Traditionally, the supreme leadership of Iran and its foreign ministry have not been in sync at every turn.

Treasury Secretary Scott Bessent cautioned in the opposite direction, releasing his own statement that "things would go very slowly" on the sanctions side of things and that nothing would come until the Strait of Hormuz is open and the Iranians give up their highly enriched uranium and their nuclear program. That is an inflexible attitude that is made public, and it is either a negotiating position or a pledge to domestic audiences, or both.

The economy can't wait much longer

But behind the diplomatic verbiage lies the fact that this moment is about a distressed global economy. Global oil stocks are being used up at a record rate more than 10 weeks into the war, amid growing shortages of supply flowing through the Strait of Hormuz. Oil prices had jumped to $144 per barrel in May and dipped to under $100 before rising again and are hovering around $110 for North Sea Dated crude at the time of the IEA's May report.

Cumulative losses from Gulf producers have already passed the one billion barrel mark, and over 14 million bpd are now shut-in, which is an unprecedented supply shock, as traffic through the Hormuz continues to be restricted. To put that in perspective, Iran's blockade is about twice the disruption the world suffered in the energy shock of the 1970s.

The global economy emerged from the 2022 price shock with continued growth; under the prolonged war scenario, global inflation could reach 7.7% in 2023 – a level similar to the 2022 peak – but due to the significant disruption, the world economy could slip into a contraction. The GDP growth of the world in 2026 may drop to 1.4 per cent, the US and most major advanced economies may be in recession, and the growth of the Chinese economy may slow down to 3.4 per cent.

The International Monetary Fund's downside scenario scenario calls for global growth to drop to 2.0% a level the Fund considers a close call for a global recession, which has only been recorded four times since 1980, most recently in the financial crisis of 2008 and the COVID-19 pandemic.

Based on its modeling, Moody's Analytics gave the chance of a recession in the United States this year a 49% probability, while inflation as measured by Personal Consumption Expenditures was forecast to jump up to a 3.7% annual rate of increase in April, from 2.5% in February. The Fed is in a very familiar, though cruel, dilemma: when the economy is under an energy shock, it is the wrong time to be hawkish, and when the inflation rate is 3.7%, it's the wrong time to be dovish.

This has not spared Europe. By mid-March, Dutch TTF gas benchmarks had more than doubled to more than €60 per megawatt-hour, the European Central Bank delayed its rate-cut plans, and UK inflation is projected to surpass 5% this year, as the OECD reduced Britain's growth forecast by 0.7% the deepest of any other G20 country.

The Middle East and Central Asia are the worst affected, with the 2026 forecast growth for the region cut by two percentage points to 1.9%. In the Gulf, Iran, Qatar, Iraq, Kuwait and Bahrain are expected to go into recession.

The true nature of the nuclear issue

Indeed, the most difficult aspect of any deal is not the extension of the ceasefire. It is the uranium. Iran has invested decades and a vast amount of political capital in developing an enrichment capability and this enrichment program has become the core of its deterrence strategy particularly after observing the fate of other countries that have abandoned their weapons programs.

However, before the start of the war, Steve Witkoff has reported that Iran had demanded its "inalienable right" to enrich uranium, and even brazenly boasted that its 460 kilograms of 60% enriched uranium could yield 11 nuclear bombs. The boast was no less an internal as an external one. The current deal does not address enrichment it postpones it, and puts it at the top of the 60-day negotiating agenda. The US side has been stating the "no dust, no dollars" description of the stockpile, and has been making it clear that it expects physical removal and not storage or dilution to be the standard for compliance.

The credibility problem exists. The so-called nuclear deal signed by the Obama team, known as the Joint Comprehensive Plan of Action (JCPOA), provided Iran sanctions relief in return for temporary curbing of its nuclear ambitions, which Iran has not honored by the end of Trump's second term. If any new arrangement is put in place, it will be immediately suspect to the hawks in Washington (who remember history well).

Perspective from the area and beyond

In this alternate version, the MOU is inked in days, oil prices plummet and the Hormuz is once again open with both Trump and Khamenei announcing some sort of win. In another scenario, the negotiations stall, the 60-day countdown is used as a negotiating tactic and a point of disagreement, and the already-troubled global economy limps through the summer without resolution.

US Secretary of State Marco Rubio sounded a guarded note on the deal, noting that there were "good signs" that an agreement is possible, but added that an agreement would be "unfeasible" if Iran desired to gain permanent control of the shipping lane through Hormuz. That is a line drawn in a way that it would be evident that crossing it would signify a return to hostilities.

The striking thing is the ratio of the rate of economic damage to the rate of diplomacy. Markets can change in a heartbeat. Oil can rise $20 in an afternoon, on one bad headline. Diplomatic channels – ebbing and flowing, approvals, face saving verbiage, all take days and weeks. Despite the ongoing uncertainty, the global outlook for real GDP growth has been materially reduced following disruptions to energy markets and energy supply chains, which have both led to slower expected real GDP growth and higher inflation.

A deal is a deal anything else is a postponement. Both Trump and Khamenei are under pressure to realize the difference before it's too late. The negotiators have done what they did. The rest is a matter of political will.