The U.S. and Iran appear to be moving closer to a limited and tentative agreement aimed at halting the conflict, according to sources and officials who spoke to Reuters. The two sides are reportedly working on a framework plan that would suspend hostilities without resolving the most contentious issues.

The proposed arrangement is based on a brief memorandum of understanding rather than a comprehensive peace agreement, highlighting the deep divisions that remain between Washington and Tehran and suggesting that any deal reached at this stage would only serve as a temporary measure.

Even the prospect of a limited agreement has already affected global markets. Asian stocks climbed toward historic highs on Thursday, while oil prices dropped sharply amid expectations that normal shipping flows through the Strait of Hormuz could soon resume.

The three stages of the proposed deal

Washington and Tehran have reportedly scaled back ambitions for a broader settlement, as major disagreements persist — particularly over Iran’s nuclear program, its stockpile of highly enriched uranium, and the duration of any nuclear restrictions.

Instead of pursuing a final settlement immediately, both sides are focusing on an interim arrangement designed to prevent renewed conflict and stabilize navigation through the Strait of Hormuz.

A senior Pakistani official involved in mediation efforts told Reuters: “Our priority is to announce a permanent end to the war, while the remaining issues can be discussed once the two sides return to direct negotiations.”

According to sources familiar with the talks, the proposed framework includes three stages:

• A formal declaration ending the war,
• Resolution of the crisis in the Strait of Hormuz, and
• A 30-day negotiation period aimed at reaching a broader agreement.

The one-page memorandum intended to end the conflict is reportedly close to completion, although significant differences between the two sides remain unresolved.

Optimism from Trump, caution from Tehran

The U.S. president appeared optimistic about the progress of negotiations.

“They want to make a deal … it’s very possible,” he told reporters at the White House on Wednesday, later adding that “everything will be over quickly.”

However, the proposed framework leaves several critical issues unresolved, including Washington’s demand for a complete suspension of Iran’s nuclear activities and the full reopening of the Strait of Hormuz.

Iranian officials, meanwhile, reacted more cautiously. A Foreign Ministry spokesperson said Tehran would respond “in due course,” reportedly within the day, while Iranian MP Ebrahim Rezai dismissed the proposal as “more of an American wish list than a realistic agreement.”

At the same time, Iranian Parliament Speaker Mohammad Bagher Ghalibaf mocked reports of an imminent breakthrough, writing on social media that “Operation Trust Me Bro has failed,” portraying the leaks as part of a U.S. communications effort following the failure to reopen the Strait of Hormuz.

Oil falls and markets rally

Reports of a potential agreement pushed international oil prices to a two-week low on Wednesday. Brent crude fell roughly 11 percent, briefly dropping near $98 per barrel before recovering above $100 and settling around $99 on Thursday.

Global equity markets also posted strong gains, while bond yields declined amid hopes that tensions disrupting global energy flows may ease.

Middle East tensions and Saudi Arabia’s role

Meanwhile, Trump reportedly suspended a planned two-day naval operation on Tuesday that aimed to reopen the blocked Strait of Hormuz, citing progress in ongoing negotiations.

NBC News, citing two U.S. officials, reported that Trump made the decision after Saudi Arabia refused to allow U.S. forces to use a Saudi military base for the operation.

According to the report, Saudi officials were surprised and angered by Trump’s announcement that the United States would escort merchant vessels through the strait. Riyadh subsequently informed Washington that Saudi bases and airspace would not be made available for military operations.

The White House did not immediately comment on the report.

Key issues remain unresolved

Even if an interim agreement is reached, several major disputes remain unresolved.

A source familiar with the negotiations said the U.S. talks are being led by Trump’s special envoy Steve Witkoff and the president’s son-in-law Jared Kushner.

Should both sides agree on the preliminary framework, a 30-day period of intensive negotiations would begin in an effort to secure a comprehensive agreement.

According to sources, the draft memorandum does not include several longstanding U.S. demands that Tehran has consistently rejected, including restrictions on Iran’s missile program and an end to its support for pro-Iranian armed groups across the Middle East.

The proposal also reportedly fails to clearly address Iran’s existing uranium stockpile — estimated at more than 400 kilograms of enriched uranium — a major concern for Washington.