War on the Edge of Peace: U.S. and Iran Inch Toward a Deal — But the Hardest Questions Remain Open

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A War That Shocked the World — Now Looking for an Exit

On February 28, 2026, the United States and Israel launched a coordinated military campaign against Iran. The strikes, codenamed Operation Epic Fury, targeted Iran's nuclear facilities, ballistic missile infrastructure, and military command structures. Iran's Supreme Leader Ali Khamenei was killed in the initial assault. The country's new leadership, headed by Khamenei's son, retaliated with missile strikes on Israel, U.S. military bases in the region, and civilian infrastructure in neighboring Arab states.

Among Iran's most consequential responses was the closure of the Strait of Hormuz — the narrow waterway through which roughly one-fifth of the world's oil supply passes. That single move sent shockwaves through global energy markets and placed intense pressure on every major economy.

A ceasefire was announced on April 7. But it did not resolve the underlying conflict — it only paused the shooting.

Now, nearly ten weeks after the war began, both sides are cautiously moving toward something more formal.

The Plan: A One-Page Document to Stop the Fighting

According to multiple sources familiar with the negotiations, the emerging framework is deliberately limited in scope. Rather than attempting a sweeping peace treaty, Washington and Tehran are working on a brief, one-page memorandum of understanding (MoU) — a document that would formally declare the war over and open the door to further talks.

The proposed process unfolds in three stages: a formal declaration ending the conflict, followed by steps to resolve the Strait of Hormuz crisis, and then a 30-day window for in-depth negotiations on the major outstanding issues.

Pakistan has played a central role as mediator. A senior Pakistani official confirmed to Reuters that the priority is a formal end to hostilities, with the remaining disputes to be addressed once both parties return to direct dialogue. Pakistan's Foreign Ministry spokesperson Tahir Andrabi said on Thursday that Islamabad remains hopeful a deal will come soon — and that it would be "an honour" for Pakistan if the agreement is reached there.

Trump's envoy Steve Witkoff and his son-in-law Jared Kushner are leading the U.S. side of the negotiations.

Trump Optimistic — Iran Plays It Cool

President Donald Trump has made clear he wants this war over quickly. Speaking at the White House on Wednesday, he said Iran "wants to make a deal very much" and added that it would "be over quickly." He later told PBS News he was optimistic about reaching an agreement before his planned trip to China the following week.

But Trump also made a pointed warning: if Iran does not agree to his terms, the bombing will resume — and at a significantly higher intensity. "If they don't agree, the bombing starts, and it will be, sadly, at a much higher level," he wrote on Truth Social.

Tehran's response has been cooler. Iran's Foreign Ministry said it is still reviewing the U.S. proposal and will pass its response through Pakistani intermediaries. Several Iranian lawmakers pushed back sharply. One described the U.S. document as "more of an American wish list than a reality." Iran's parliament speaker Mohammad Baqer Qalibaf mocked the reports of imminent progress, writing on social media that "Operation Trust Me Bro failed" — framing the entire negotiation narrative as a U.S. attempt to spin its failure to reopen the strait.

Iran's Revolutionary Guard struck a somewhat different tone, however: the navy command issued a statement saying that once threats from "aggressors" end, safe transit through the strait would be facilitated.

The Big Issues Left on the Table

Despite the cautious optimism, the proposed memorandum notably leaves out several of Washington's original core demands. There is no mention of restrictions on Iran's ballistic missile program. No requirement to end Tehran's support for proxy militias across the Middle East — including Hezbollah in Lebanon. And critically, no resolution on Iran's stockpile of approximately 400 kilograms of near-weapons-grade enriched uranium.

Iran has been firm on one point in particular: its nuclear enrichment program is, in its own words, "non-negotiable." Tehran has also resisted demands to transfer its existing uranium stockpile out of the country.

Negotiations are reportedly focused on the duration of a potential moratorium on uranium enrichment — with figures between 12 and 20 years circulating in different reports. But no figure has been agreed upon, and the question of what to do with the existing stockpile remains deeply unresolved.

Israel's concerns add another layer of complexity. Israeli Prime Minister Benjamin Netanyahu is consulting closely with Trump administration officials. Israeli analysts say Jerusalem's core demands include the full dismantlement of Iran's enrichment infrastructure, limits on its ballistic missile program, and preventing Iran from rebuilding Hezbollah and Hamas.

On Thursday, Israel confirmed it had killed a Hezbollah commander in an airstrike on Beirut — the first Israeli strike on the Lebanese capital since a ceasefire there was agreed the previous month. Hezbollah entered the conflict on March 2 by opening fire in support of Iran.

Saudi Arabia's Role — and Its Limits

One significant complication emerged this week involving Saudi Arabia. NBC News reported that Trump's decision to pause "Project Freedom" — the U.S. naval operation to escort commercial ships through the Strait of Hormuz — came after Saudi Arabia withdrew permission for the U.S. military to use a Saudi base for the operation.

Riyadh was apparently surprised and angered by the announcement of the escorting mission and informed Washington it would deny the U.S. permission to fly military aircraft from Saudi soil or through Saudi airspace. The White House did not confirm the report.

Despite the pause on Project Freedom, the U.S. has maintained its own naval blockade of Iranian ports. U.S. Central Command confirmed on Wednesday that American forces disabled an Iranian oil tanker attempting to reach an Iranian port.

France also moved this week, dispatching the aircraft carrier Charles de Gaulle through the Suez Canal toward the southern Red Sea — positioning it as part of a multinational effort, coordinated with the UK and over 40 nations, to eventually help restore freedom of navigation in the strait.

Markets React: Oil Down, Stocks Up

Even the prospect of a limited deal was enough to move global markets. Oil prices fell roughly 11% on Wednesday, with Brent crude trading at around $98 per barrel on Thursday. Global equity markets rallied to near record highs.

"The contents of the U.S.-Iran peace proposals are thin," one senior portfolio manager at GCI Asset Management noted, "but there is an expectation in the market that further military action will not take place."

The Strait of Hormuz has been effectively closed to most international shipping since late February. Its reopening would ease supply disruptions that have contributed to elevated energy prices worldwide.

What Comes Next

The path forward remains uncertain. If both sides agree on the preliminary memorandum, a 30-day negotiation period would begin — tackling the harder questions: the nuclear program, missile restrictions, proxy groups, sanctions relief, and the release of frozen Iranian assets.

European nations, particularly France, are pressing to be part of the diplomatic process. French President Emmanuel Macron called this week for an immediate and unconditional reopening of the Strait of Hormuz and offered to facilitate broader talks alongside the UK.

Whether this short-term deal can hold — and whether it can evolve into something lasting — depends on whether both sides are genuinely ready to move beyond a war that has already reshaped the geopolitics of the Middle East.

Related: China Still Supplying Drone Parts to Iran, Russia — Report

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Sources:

1. Reuters – "US and Iran inch towards short-term deal to end fighting", May 7, 2026: https://www.reuters.com/world/china/trump-sees-swift-end-war-iran-reviews-us-peace-proposal-2026-05-07/
2. NPR – "Pakistan says it's hopeful a U.S.-Iran deal can happen soon", May 7, 2026: https://www.npr.org/2026/05/06/nx-s1-5813497/iran-war-strait-hormuz-updates
3. Al Jazeera – "Has the US accepted Iran's demand to settle Hormuz first, nuclear later?", May 6, 2026: https://www.aljazeera.com/news/2026/5/6/has-the-us-accepted-irans-demand-to-settle-hormuz-first-nuclear-later
4. The Hill – "What's in the US's 1-page proposal for Iran peace deal?", May 7, 2026: https://thehill.com/policy/international/5866955-us-iran-peace-deal-strait-of-hormuz/
5. UK House of Commons Library – "US-Iran ceasefire and nuclear talks in 2026": https://commonslibrary.parliament.uk/research-briefings/cbp-10637/

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