The United States and Iran have reached a two-week conditional ceasefire, mediated by Pakistan, narrowly averting a major military escalation. This agreement came barely an hour and a half before President Donald Trump’s deadline for Iran to capitulate was set to expire. Trump, who had previously threatened to obliterate Iran's power plants and bridges, announced the “double-sided CEASEFIRE” on his social media platform, Truth Social, claiming that US forces had met and exceeded all military objectives and hailing it as “a big day for world peace.” The Iranian government, through its Supreme National Security Council, confirmed the deal and framed it as a “massive victory,” announcing that negotiations for a final peace settlement would commence on Friday in Pakistan.

A critical element of the ceasefire deal involves the temporary reopening of the Strait of Hormuz, a strategically vital energy corridor through which approximately one-fifth of the world’s oil and liquefied natural gas (LNG) flows. This waterway had been effectively blocked since US-Israeli attacks commenced on February 28. While Trump asserted the deal would lead to the “complete, immediate and safe opening” of the Strait, Iranian Foreign Minister Abbas Araghchi stated that passage would occur under Iranian military management. Reports from the region suggested that Tehran intends to implement its earlier proposal to share control of the Strait with Oman and impose tolls, estimated to be around $1 million to $2 million per ship. This proposed toll system would mark a significant departure from the pre-war status quo, where the Strait operated as a free international waterway, thereby cementing Iran’s role as a gatekeeper and potentially providing it with a substantial new revenue source.

Despite the announcement, the terms of the ceasefire are characterized by significant ambiguities and contradictions. Neither side specified an exact start time for the truce, and initial reports indicated that attacks continued in Israel, Iran, and across the Gulf region early on Wednesday. A major point of contention is the inclusion of Lebanon in the ceasefire. Pakistani Prime Minister Shehbaz Sharif, acting as mediator, asserted on X that the ceasefire would be effective “everywhere, including Lebanon.” However, this claim was swiftly contradicted by the office of Israeli Prime Minister Benjamin Netanyahu, which explicitly stated that the two-week ceasefire did not encompass the ongoing conflict with the Lebanese militia Hezbollah. Israeli forces subsequently continued “fighting and ground operations,” including missile strikes on villages in southern Lebanon. French President Emmanuel Macron, while welcoming the ceasefire, specifically called for Lebanon, a former French protectorate, to be fully included in the deal.

European leaders largely welcomed the ceasefire as a “step back from the brink” and a “much-needed de-escalation,” while simultaneously urging for a permanent cessation of hostilities and the complete reopening of the Strait of Hormuz. German Chancellor Friedrich Merz and UK Labour leader Keir Starmer called for sustained diplomacy to achieve a “just and lasting peace.” Spanish Prime Minister Pedro Sánchez, a vocal critic of Trump’s military actions, cautioned against allowing momentary relief to overshadow the “chaos, the destruction, and the lives lost,” emphasizing the need for “diplomacy, international legality, and PEACE.” EU foreign policy chief Kaja Kallas highlighted the agreement as an opportunity “to tone down threats, stop missiles, restart shipping, and create space for diplomacy towards a lasting agreement.” European Commission President Ursula von der Leyen also underscored the deal’s potential for regional de-escalation. France’s President Macron stated that approximately 15 countries were mobilized “under French leadership” to facilitate traffic resumption through the Strait. Additionally, a UK-led coalition comprising over 40 countries committed to securing Hormuz, though European officials maintained that any proposed toll system for transit would be unacceptable under the United Nations Convention on the Law of the Sea (UNCLOS), which forbids such charges.

Global financial markets reacted swiftly and positively to the ceasefire announcement. Oil prices plunged by more than 17%—the largest such fall since the 1991 Gulf War—and European gas prices dropped sharply by around 20%, generating hopes for reduced energy bills for consumers. Stock markets surged worldwide: Frankfurt saw a massive 5% increase at opening, the FTSE 100 rose by 2.55%, Japan’s Nikkei index closed up over 5%, and South Korea’s Kospi gained nearly 7% on Wednesday. World leaders also offered praise, with France’s Macron calling the deal “a very good thing” and Egypt’s foreign ministry commending the US for “giving diplomacy a chance.” However, analysts cautioned that the benefits of lower energy prices would likely take 6 to 9 months to be reflected in consumer bills due to established hedging strategies, and households on fixed-price tariffs would not see changes until their contract terms expired. Major shipping line companies, including Maersk, demanded “full maritime certainty” before resuming normal operations through the Strait.

As negotiations loom, Iran’s 10-point plan will serve as the basis for talks, which the Iranian government has already framed as a significant victory. This plan reportedly includes demands for the lifting of all sanctions, the payment of war reparations, and the acceptance of Iran’s right to enrich uranium—conditions that have historically been beyond Washington’s red lines. While Trump initially dismissed Iran’s proposal as “fraudulent,” he later referred to it as “a workable basis on which to negotiate.” Subsequently, he attempted to reframe the ceasefire, implying it was based on his own (unspecified) 15-point plan, denying any uranium enrichment, and referring to Iran’s enriched uranium stockpile as “Nuclear ‘Dust’” that would be removed. The Farsi version of Iran’s 10-point ceasefire plan notably included the phrase “acceptance of enrichment” for its nuclear program, a detail conspicuously absent from English versions shared with journalists, suggesting its inclusion for domestic consumption. Iran’s possession of 440kg of highly enriched uranium (theoretically sufficient for a dozen nuclear warheads) remains a powerful bargaining chip in these discussions.

The ceasefire, while providing a moment of relief, is widely described as fragile. Trump himself ominously warned Sky News that if the negotiations “isn’t good, we’ll go right back to [war].” The continued Israeli military operations in Lebanon further underscore the volatile regional situation. This conflict has revealed Iran entering negotiations bloodied but intact, having demonstrated its capacity to survive severe losses and inflict economic pain through its asserted control over the Strait of Hormuz. Conversely, the US may find itself in a weaker negotiating position compared to before the conflict began. Humanitarian organizations, such as the Norwegian Refugee Council, welcomed the ceasefire for enabling expanded relief efforts for millions of refugees and displaced persons, but questioned the stark disparity between funding readily available for war and the chronic lack of funding for its victims. European leaders continue to emphasize the need for sustained diplomacy to achieve a just and lasting peace in the region.