Is the Iran-US agreement "just a step away"? Oil prices plummeted by 5% on the news, but there are still "one to two" disagreements between the two sides.

The U.S. and Iran are gradually closing in on an agreement to extend the ceasefire and reopen the Strait of Hormuz, but both sides officials say that there are still several clauses that need further negotiation. A broad framework for the agreement, hinted at by the White House and Iran, has led to a significant drop in international oil prices on Monday (May 25). Official statements: Signing "not imminent" Iranian Foreign Ministry spokesperson Ismael Baghaei said on Monday, "Both sides have reached consensus on many issues under discussion, but no one can claim that the agreement is imminent." Earlier, U.S. Secretary of State Mike Pompeo said that Iran needs more time to respond to the U.S. proposal. President Trump also stated that he would not rush into an agreement. Trump is facing pressure from the hardliners on Iran, who claim that the emerging agreement makes too many concessions to Iran. Trump tweeted on Monday, "The deal with Iran is either a great and meaningful deal or there is no deal. This will be a completely different result from the disastrous Joint Comprehensive Plan of Action (JCPOA) negotiated by the failed Obama administration." The JCPOA is an agreement to limit Iran's nuclear program in exchange for sanctions relief and verification by the UN nuclear watchdog. Market reaction: Crude oil plunges 5%, risk assets generally rally Crude oil prices fell more than 5% on the day, with Brent crude trading around $98 per barrel. Global stock markets rose across the board, with many traders anticipating that the agreement could effectively end this war, which had driven energy prices higher and exacerbated inflationary pressures. Harris Qureshi, Chief Investment Officer at Chicago's Karobaar Capital, said, "For weeks, a lot of oil trading has been based on worst-case scenario assumptions. But once it becomes clear that negotiations are ongoing and the situation is not escalating, some of the panic premium will quickly dissipate." Previously, safe-haven funds flowed into gold, the U.S. dollar, and U.S. bonds due to the Middle East war, are now being reallocated to risk assets like stocks. Indices such as the Nikkei 225, Korea's KOSPI, and the pan-European Stoxx 600 all rose on Monday, indicating that global capital is bullish on the theme of a "peaceful restart." However, despite the significant reduction in panic premium, multiple market strategists caution that there is still a certain level of geopolitical risk discount embedded in current oil prices meaning that the market has not fully priced in the possibility of the agreement collapsing. Framework of the agreement: Ceasefire extension and passage rights in the Strait of Hormuz At the urging of several Arab leaders, the U.S. and Iran have been discussing extending the current fragile ceasefire agreement, but they have different descriptions of what should be included in the temporary agreement. In recent weeks, both countries have put forward multiple proposals. Trump insists that Iran must not be allowed to develop nuclear weapons a claim that Iran denies. The main sticking points include whether Iran will allow ships to pass freely through the Strait of Hormuz during the ceasefire extension, whether Iran will allow the U.S. to take over its highly enriched uranium, and whether the two sides will agree on the speed of the U.S. unfreezing Iran's billions of dollars in assets. An Iranian Foreign Ministry spokesperson stated that Iran is seeking to collect "service and environmental protection navigation fees" for passage through the Strait of Hormuz, and they refused to describe it as a toll. It is not clear whether the U.S. will accept this arrangement. There are still disagreements between the U.S. and Iran on "one or two clauses," according to the semi-official Tasnim News Agency citing informed sources. Nuclear issues left for subsequent negotiations While the U.S. and Iran are gradually reaching consensus on issues such as extending the ceasefire and passage rights in the Strait of Hormuz, the thorny issue of nuclear weapons has been explicitly excluded from the temporary agreement and left for subsequent negotiations. This "easy first, difficult later" arrangement provides a window for short-term cooling of oil prices and sets the stage for long-term geopolitical risks. Discussions on Iran's nuclear program and its timetable for disposing of weapons-grade enriched uranium will take place after the temporary agreement is reached, with no guarantee of a resolution. The U.S. is likely to push for Iran to commit to not enriching uranium for around 20 years. Iran currently has highly enriched uranium up to 60%, just a step away from weapons-grade (90%). The International Atomic Energy Agency has repeatedly warned that Iran is the only non-nuclear weapon state producing such high-enriched uranium. As part of the proposed interim agreement, the U.S. plans to lift sanctions on Iran, and Iran has agreed in principle to dispose of its highly enriched uranium. Officials say that any relaxation of sanctions will depend on Iran's compliance with all terms of the agreement. However, Iran has not confirmed any of these details and intends to retain its uranium stockpile. Additionally, sources revealed that the U.S. is likely to demand that Iran commit to refraining from any uranium enrichment activities for about 20 years in subsequent nuclear negotiations. This time span far exceeds the restriction period set in the 2015 JCPOA (which limited Iran to enriching up to 3.67% for 15 years).