Vance signals US-Iran deal proximity as oil markets react to ceasefire extension hopes

US Vice President JD Vance indicated on Thursday that Washington and Tehran are nearing a tentative agreement to extend their ceasefire by 60 days and ease shipping restrictions in the Strait of Hormuz. The proposed framework, which remains subject to final approval from President Donald Trump, aims to significantly setback Iran’s nuclear programme while addressing specific sticking points regarding enriched uranium stockpiles. Market reaction was immediate, with Brent crude oil prices dipping 0.37% to $93.36 a barrel on hopes of de-escalation.

Speaking to reporters, Vance stated that while the two sides were close to a resolution, they were “not there yet.” He emphasised that the United States retained the capability to substantially set back Tehran’s nuclear programme, a leverage point that continues to shape the negotiation dynamics. Vance acknowledged that discussions were ongoing regarding specific language points within the Memorandum of Understanding, particularly concerning enrichment questions, but he expressed a degree of optimism about the potential outcome.

The diplomatic effort follows a fragile ceasefire that began on 8 April 2026. Tensions were recently heightened when US forces conducted ‘self-defence’ strikes on missile sites and vessels in southern Iran on 26 May, coinciding with Iranian negotiators arriving in Doha for peace talks. Despite the military action, oil prices had previously fallen below US$100 a barrel as investors reacted to the developing diplomatic situation, with US oil futures also seeing a decline of 0.71% to $88.27 a barrel.

However, the stability of the negotiations remains uncertain. Iran’s semi-official Tasnim news agency has stated that the deal has not been finalised or confirmed, casting doubt on the durability of the talks. Vance noted that it was difficult to predict exactly when or if President Trump would sign the agreement, given the back-and-forth nature of the language negotiations. The tentative deal requires final approval from both the US President and Iranian leadership before it can be implemented.

The US-Iran diplomatic developments occur against a backdrop of broader regional instability. Israeli Prime Minister Benjamin Netanyahu has ordered the military to take control of 70 percent of the Gaza Strip, defying terms of a US-backed ceasefire that took effect in October. Additionally, the Israeli military conducted strikes in Lebanon, killing at least 14 people in the south ahead of talks in Washington, while Lebanese Prime Minister Nawaf Salam condemned the ongoing military operations within its borders.