US and Iran closing in on memorandum to end war, sources say

The United States and Iran are closing in on an agreement on a one-page memorandum to end the war in the Gulf, a source from mediator Pakistan and another source briefed on the mediation said.

The sources confirmed information initially reported by the US media outlet Axios. The proposed 14-point, one-page memorandum would formally end the war, followed by discussions to unblock shipping through the Strait of Hormuz, lift US sanctions on Iran and agree curbs on Iran's nuclear programme.

"We will close this very soon. We are getting close," said the source from Pakistan, which hosted the war's only peace talks so far and has continued in that role of mediator, ferrying proposals between the sides.

Reports of the possible agreement caused global oil prices to plunge, with benchmark Brent crude futures falling more than 8 per cent to around $100 a barrel. Global share prices also leapt and bond yields fell on optimism of an end to a war that has disrupted energy supplies. 

The memorandum was disclosed hours after US President Donald Trump paused a three-day-old naval mission to reopen the Strait of Hormuz, citing progress in peace talks. Iran said now that US "threats" had ended, passage through the strait would be possible under new terms it was putting in place, without giving details.

The White House, the State Department and Iranian officials contacted by Reuters did not immediately respond to requests for comment. US news channel CNBC quoted a spokesperson from the Iranian foreign ministry as saying Tehran was evaluating a 14-point US proposal.

NO MENTION OF KEY US DEMANDS

The source briefed on the mediation said the US negotiations were being led by Trump's envoy Steve Witkoff and son-in-law Jared Kushner.

If both sides agreed on the preliminary deal, that would start the clock on 30 days of detailed negotiations to reach a full agreement, the source said.

The source said the full agreement would include the US lifting sanctions and releasing frozen Iranian funds, Iran and the United States lifting competing blockades on the Strait of Hormuz, and curbs on Iran's nuclear programme, with the aim of seeking a pause or moratorium on Iranian enrichment of uranium.

While the sources said the memorandum would not initially require concessions from either side, the sources and Axios did not mention several of the key demands that Washington has made in the past and that have previously been rejected by Iran.

US demands that were not mentioned include: curbs on Iran's missile programme and an end to its support for proxy militias in the Middle East.

While the sources spoke of a moratorium on future Iranian enrichment of uranium, they did not mention Iran's existing stockpile of more than 400 kg of uranium enriched to near weapons grade. Washington has previously demanded Iran give this up before any end to the war.

The Axios report said the US expected Iranian responses on several key points in the next 48 hours.

TRUMP PAUSES MISSION TO UNBLOCK STRAIT

Earlier, Trump announced a pause to "Project Freedom", a mission he had announced two days earlier to guide ships through the blocked strait.

The mission had failed to bring about any significant resumption of traffic through the waterway, while provoking a new wave of Iranian strikes on ships in the strait and on targets in neighbouring countries.

In the latest incident, a French shipping company reported on Wednesday that one of its container ships had been struck in the strait the previous day, and that injured crew had been evacuated.

In announcing he was pausing the mission, Trump cited "great progress" in negotiations with Iran, without giving further details.

Trump had said last week he was likely to reject Iran's latest proposal for talks. The Iranian offer also contained 14 points, and also called for setting aside discussion of nuclear issues until after the war ended and the shipping dispute was resolved.

In comments on a visit to China on Wednesday, Iran's Foreign Minister Abbas Araqchi made no mention of Trump's latest remarks, but said Tehran was holding out for "a fair and comprehensive agreement".

Iran has effectively shut the strait to all shipping apart from its own since the United States and Israel launched the war on February 28. In April, Washington imposed its own separate blockade of Iranian ports.

While the mission was in effect, Iranian drones and missiles hit several ships in and around the strait, including a South Korean cargo vessel that reported an explosion in its engine room.