US-Iran deal reopens Strait of Hormuz as G7 flags 2-week timeline

The US and Iran signed a deal to reopen the Strait of Hormuz, but G7 allies warn mine clearance could take weeks.

The United States and Iran reached a tentative agreement to reopen the Strait of Hormuz, ending a four-month blockade that disrupted one-fifth of global oil shipments, though G7 allies cautioned the timeline for safe passage remains uncertain. President Donald Trump announced the memorandum of understanding on Truth Social, declaring the strait would reopen "immediately" and authorizing the removal of the US naval blockade on Iranian ports.

"Ultimately the blockade will stay as the strait opens, and then the blockade will open and then the straits open," Pete Hegseth, US secretary of defense, said on CBS's "Face the Nation," adding the process could take two weeks to "fully mature." Hegseth's clarification came moments after he initially said the waterway would reopen "immediately" upon signing.

Oil prices fell roughly 5% on the news while Bitcoin rallied about 5% to $67,250, as traders priced in lower geopolitical risk premiums. A US senior official said shipping would increase noticeably within two weeks but warned a return to pre-war levels would take longer, with the number of sea mines planted by Iran still unknown. The Strait of Hormuz typically handles about one-fifth of the world's oil and liquefied natural gas shipments, making its closure one of the most consequential supply disruptions in decades.

The 60-day ceasefire extension and formal signing scheduled for June 19 in Switzerland mark the most significant de-escalation since the conflict began in late February, but the absence of a written agreement on Iran's nuclear program leaves the broader peace process vulnerable to collapse. Pakistani Prime Minister Shehbaz Sharif, whose country mediated the talks, confirmed the deal on X, saying it includes an "immediate and permanent" halt to military operations on all fronts, including Lebanon.

Mine Clearance Remains the Critical Bottleneck

Iran has claimed to have laid sea mines across the narrow waterway, though the exact number remains unknown. MIT political science associate professor Caitlin Talmadge said confirming the strait is safe will be a "tedious" engineering task, noting that dedicated minesweeping vessels are highly vulnerable if hostilities resume. "Mine clearance operations should be conducted in a permissive environment," Talmadge said. "Once Iran resumes attacks, those vessels and personnel are at risk — especially specialized minesweepers, which typically lack self-defense capabilities."

Over 15 countries have pledged equipment and personnel for clearance operations, according to French President Emmanuel Macron, who said France is "ready to take on its responsibilities." But European allies attached conditions. Italian Prime Minister Giorgia Meloni said Italy's participation depends on a ceasefire in Lebanon, where Israeli forces have been conducting operations. German officials warned that any deployment requires international authorization, a process that could take weeks rather than days.

Market Implications Hinge on Execution

The discrepancy between Trump's assurances and the operational reality on the ground has created a gap that markets are watching closely. Oil industry leaders have lobbied the White House against any arrangement that would allow Iran to charge tolls for safe passage through the strait, according to a person familiar with the discussions. The last time a comparable blockade disrupted the Strait of Hormuz was during the Iran-Iraq war in the 1980s, when the so-called Tanker War led to a sustained spike in crude prices and shipping insurance costs.

If the June 19 signing proceeds and mine clearance begins within days, oil prices could drift lower as supply normalization takes hold. If the process stalls — whether from Iranian backtracking, Israeli military action, or G7 reluctance — the risk premium could snap back quickly, pushing crude higher and reigniting volatility across energy equities and currencies tied to Gulf producers.

This article is for informational purposes only and does not constitute investment advice.