Beginner

The United States and Iran are very close to making a peace agreement. President Trump said on May 27 that the deal is 95 percent finished. The two countries have been fighting for months, and now they are very close to stopping the conflict.

The deal is about a body of water called the Strait of Hormuz. This strait is very important because many ships carry oil through it. Iran put underwater bombs called mines in the water to block the ships. The US sent its own warships there too.

Under the new agreement, Iran would remove the mines from the water. The United States would stop blocking Iranian ships. Iran could then sell its oil again to other countries. This is very important because the price of oil would go down for everyone.

The two countries also talked about Iran's nuclear program. Iran promised in the deal that it will never build a nuclear weapon. The agreement would last 60 days, and then both sides would keep talking about a longer peace.

strait

a narrow body of water that connects two larger bodies of water

mines

underwater bombs that are placed in water to damage ships that come close to them

naval blockade

when warships stop other ships from entering or leaving a port or water area

sanctions

rules that stop a country from doing business or trading with other countries

nuclear weapon

a very powerful bomb that uses atomic energy and can destroy a whole city

agreement

when two or more people or countries decide on the same plan

conflict

a serious fight or argument between people, groups, or countries

truce

a short stop in fighting, agreed by both sides, while they try to make peace

Elementary

The United States and Iran are closing in on a major peace agreement to end months of military conflict. President Donald Trump declared on May 27 that the deal is 95 percent complete, making it the most optimistic public statement either side has made. American envoys Steve Witkoff and Jared Kushner have been leading the negotiations, with Qatar and Pakistan acting as key go-betweens.

The proposed deal is a 60-day memorandum of understanding focused on reopening the Strait of Hormuz. This narrow waterway carries around 20 percent of the world's oil supply, but it has been disrupted since Iran placed naval mines in the water and the United States set up a naval blockade. Under the deal, Iran would remove the mines and the US would lift its blockade on Iranian ports.

The United States would also issue temporary sanctions waivers, meaning Iran could sell its oil on world markets for the 60-day period. In return, Iran has agreed in principle to commit to never seeking nuclear weapons and to enter talks about suspending its uranium enrichment program. Secretary of State Marco Rubio confirmed that significant progress had been made, though small details were still being decided.

Oil markets responded quickly to the news. Brent crude oil fell from over 108 dollars a barrel earlier in the week to around 105 dollars as traders expected more Iranian oil to arrive on world markets. Analysts warned, however, that no deal has been formally signed yet, and earlier rounds of negotiations had collapsed over disagreements about how quickly sanctions would be lifted.

envoy

an official representative sent by a government to negotiate on its behalf

intermediary

a person or country that helps two sides communicate and reach an agreement

memorandum of understanding

a written document recording what two sides have agreed to do, even if it is not a final treaty

uranium enrichment

a process that increases the concentration of a certain form of uranium, used in nuclear energy or weapons

sanctions waivers

official permissions that allow certain activities normally blocked by economic penalties

Brent crude

a widely traded type of oil from the North Sea, used as a global price reference

blockade

the use of military force or ships to prevent goods or people from entering or leaving an area

negotiations

discussions between two or more sides trying to reach an agreement

Intermediate

US President Donald Trump announced on May 27 that a framework accord between the United States and Iran is 95 percent finalized, describing the proposed 60-day memorandum of understanding as the closest the two countries have come to ending hostilities since the conflict began earlier in 2026. Envoys Steve Witkoff and Jared Kushner have conducted the American side of the diplomacy, with Qatar serving as the primary host for face-to-face talks and Pakistan's Prime Minister Shehbaz Sharif providing additional mediation channels.

The core terms of the proposed MoU center on the Strait of Hormuz, a 21-nautical-mile-wide chokepoint through which roughly 20 percent of global oil trade passes. Iran would commit to clearing the naval mines it deployed in the strait and its approaches, while the United States would lift the naval blockade it imposed on Iranian ports. Simultaneously, the US Treasury would issue limited oil-sanctions waivers allowing Iran to resume exports to vetted buyers for the duration of the agreement, providing Tehran with immediate hard-currency relief without permanently dismantling the existing sanctions architecture.

The nuclear dimension of the accord is more politically sensitive. Iran has agreed in principle to a written commitment that it will never develop nuclear weapons and to enter structured talks, within the 60-day window, on freezing uranium enrichment above reactor grade and drawing down its stockpile of highly enriched uranium. American officials emphasize that these provisions are a necessary precondition for any final peace treaty, while Iranian negotiators have insisted the wording not imply permanent abandonment of civilian enrichment rights under the Nuclear Non-Proliferation Treaty.

Energy markets reflected cautious optimism. Brent crude eased from an intraday high above 108 dollars a barrel to approximately 105 dollars as traders priced in a modest increase in Iranian crude supply. Analysts at Goldman Sachs estimated that a successful 60-day truce could add 800,000 to 1.1 million barrels per day of Iranian output to global markets, enough to relieve some of the supply-side pressure that has kept prices elevated since the conflict began. However, analysts were quick to note that three prior rounds of negotiations had collapsed over disagreements on sanctions sequencing and enrichment rights, and no document has been formally signed.

framework accord

a broad, preliminary agreement that outlines the main principles of a deal before the final details are completed

chokepoint

a narrow strategic passage whose control gives significant power over trade or military movement

sanctions architecture

the entire system of economic penalties and restrictions imposed on a country

hard-currency relief

an easing of financial pressure by allowing a country to earn internationally accepted currencies such as US dollars

Advanced

US President Donald Trump publicly declared on May 27 that a memorandum of understanding between Washington and Tehran is 95 percent finalized, elevating the diplomatic temperature around the most consequential bilateral negotiation since the 2015 Joint Comprehensive Plan of Action. The MoU, as reported by Axios and corroborated by Al Jazeera and CNN, is structured as a 60-day confidence-building instrument extendable by mutual consent, designed to create the political space for a comprehensive peace treaty while delivering immediate material concessions to both sides. Envoys Steve Witkoff and Jared Kushner have conducted shuttle diplomacy across Doha, Islamabad and Muscat, with Qatari Foreign Minister Mohammed bin Abdulrahman Al Thani and Pakistani PM Shehbaz Sharif serving as the primary interlocutors with Iran's Foreign Minister Abbas Araghchi.

The operational core of the MoU addresses the Strait of Hormuz, a 21-nautical-mile chokepoint at its narrowest point whose closure would sever the transit of an estimated 17 to 20 percent of globally traded crude and liquefied natural gas, including volumes indispensable to South Korean, Japanese, Indian and European refiners. Iran would undertake verifiable mine-clearance operations along the inbound and outbound traffic separation schemes, while the United States would stand down its naval blockade of Iranian export terminals. A parallel Treasury Office of Foreign Assets Control instrument would issue time-limited, renewable waivers authorizing purchases of Iranian crude by vetted non-sanctioned counterparties, preserving the underlying sanctions architecture while creating a legal pathway for resumed Iranian exports estimated at 800,000 to 1.1 million barrels per day.

The nuclear provisions represent the most contested terrain in the final drafting. The US position, publicly articulated by Secretary Rubio and NSA-designate Waltz, requires Iran to make a binding written commitment to never develop nuclear weapons and to enter structured talks, within the 60-day window, on capping uranium enrichment below 20 percent U-235 and drawing down the approximately 400 kilograms of near-weapons-grade material already stockpiled. Iranian negotiators, citing Article IV of the Nuclear Non-Proliferation Treaty, have insisted on language preserving the sovereign right to peaceful enrichment at reactor grade, and have rejected any formulation that pre-commits Tehran to zero enrichment as a permanent outcome. The current impasse reportedly turns on a single adverbial clause distinguishing a freeze from an indefinite suspension.

Energy and financial markets have priced in a cautious base case. Brent crude retreated from an intraday high of 108.40 dollars per barrel to a close near 104.80 dollars, with the 12-month strip reflecting a roughly 6-dollar risk premium for Hormuz disruption that would collapse on formal signing. Lloyd's of London war-risk underwriters have provisionally reduced their aggregate probable maximum loss estimates for VLCC hull cover in the Gulf, though formal rate revisions await a signed text. The risk scenario most cited by trading desks is a repeat of the May 15 pattern, when a preliminary Axios report of a near-finalized deal was followed within 48 hours by a public Iranian denial, producing a 4-dollar round trip in Brent before positions could be unwound.