US and Iran Reach Tentative 60-Day Truce Deal as Oil Eases

After roughly three months of conflict that rattled global energy markets and squeezed import-dependent economies like India's, the United States and Iran have reached a tentative agreement aimed at locking in their fragile ceasefire. As of May 29, 2026, the framework had been negotiated but not formally signed, with US President Donald Trump still weighing a final decision.

The stakes for India are direct. The Strait of Hormuz, the narrow waterway at the centre of the dispute, carries about a fifth of the world's oil trade, and India sources close to half of its crude from Middle Eastern suppliers. For Indian households and policymakers watching petrol pumps and the LPG cylinder, the difference between a deal and a collapse is measured in rupees.

What Is in the Draft Deal

A White House official confirmed that US and Iranian negotiating teams had reached a 60-day memorandum of understanding designed to extend the ceasefire first announced on April 8, 2026, and to set up a structured round of nuclear talks. The conflict itself began in late February 2026.

Under the draft terms, restrictions on the Strait of Hormuz would be lifted in stages: Iran would clear all mines from the waterway within 30 days, while the US would correspondingly lift its naval blockade. During the 60-day window, negotiators are expected to take up Iran's stockpile of highly enriched uranium and its enrichment ambitions as top priorities, alongside discussions on sanctions relief and the release of frozen Iranian funds.

The talks have been hosted in Doha, with Iranian Foreign Minister Abbas Araghchi and parliamentary speaker Mohammed Bagher Ghalibaf representing Tehran. Qatar, Egypt and Turkey have joined the mediation effort. US Secretary of State Marco Rubio indicated earlier that finalising the details could take a few days.

Trump's Demands and Tehran's Pushback

Trump held a meeting in the White House Situation Room on May 29 that he had billed as the moment for his "final determination" on the agreement, but he ended it without announcing a decision. Writing on Truth Social, he laid out conditions: Iran "must agree" never to possess a nuclear weapon, and the Strait of Hormuz must be "immediately open" to unrestricted shipping with no tolls imposed. He also said enriched material at the sites struck during the war would be "unearthed" by the US in coordination with Iran and the International Atomic Energy Agency, and then destroyed.

Iran's state-linked outlet Fars quickly disputed parts of that framing. According to Fars, the text of the agreement contains no clause on a toll-free strait and no reference to Iran dismantling or destroying its nuclear material. Tehran has separately characterised recent US strikes — which Washington described as defensive actions taken with "restraint" — as evidence of "bad faith," underscoring how brittle the understanding remains even as both sides talk.

The gap between Trump's public language and the negotiated text is a reminder that a memorandum of understanding is not a signed treaty. Both governments face domestic audiences sceptical of concessions, and the deal could still unravel before it is formalised.

Why It Matters for India

The economic backdrop helps explain the urgency. The closure of the Strait of Hormuz disrupted roughly 20% of the world's oil trade — described by the International Energy Agency as one of the largest supply disruptions in the history of the oil market. Brent crude had climbed to around $80–82 a barrel by early March, with analysts warning prices could reach $100 if disruptions persisted. A strike on Qatar's Ras Laffan facility in March cut a chunk of that country's LNG output, with repairs estimated to take years.

India felt the pinch on multiple fronts. The country imports a large share of its crude from the Gulf, and about 60% of its LPG demand is met by imports, most of which transit Hormuz. In response to the price surge, the Indian government cut excise duties on petrol and diesel by ₹10 per litre on March 27 to cushion consumers.

The deal optimism has already shown up in markets. Oil prices have tumbled by around 20% from their 2026 peak as investors bet on a durable ceasefire that would unlock shipping. Still, analysts at UBS cautioned that there was "little evidence" of a near-term recovery in vessel traffic, with crude loadings inside the Gulf remaining very low — a sign that physical flows lag behind sentiment.

There are tentative signs of normalisation beyond energy. After what monitoring group NetBlocks called one of the longest nationwide internet shutdowns in modern history — costing Iran an estimated $30–40 million a day — Iranian President Masoud Pezeshkian ordered an end to the blackout on May 25, and connectivity began returning over the following days, though users reported uneven speeds and continued filtering.

For now, the picture is one of cautious progress rather than resolution. A signed agreement could steady oil prices and ease pressure on India's import bill; a breakdown could just as quickly send markets the other way. Indian readers, like global investors, will be watching whether the 60-day clock actually starts.

Source: cnbc.com