US-Iran Deal to Reopen Hormuz Strait Faces Pushback From Israel

A framework agreement between the US and Iran that would end the current conflict and reopen the critical Strait of Hormuz is nearing completion, but faces significant headwinds from key ally Israel and hawkish US senators. President Donald Trump said Saturday that an agreement has been "largely negotiated" and will be announced shortly, a move that could de-escalate a conflict that has rattled global energy markets.

"Every day it gets better and better," Trump said, adding that any potential deal would ensure Iran’s enriched uranium is “satisfactorily handled.” The core of the memorandum, according to a US official cited by Axios, is to end the war, gradually reopen the Strait of Hormuz, and initiate at least 30 days of subsequent negotiations, while deferring complex nuclear talks.

The initial market reaction saw the Polymarket contract for a "US-Iran permanent peace deal by May 26" jump to 56 cents, implying a 56% probability on trading volume of $6 million. Bitcoin also rallied on the news, touching a high of $76,676 after Trump's announcement appeared to reduce short-term war risk. However, the deal's viability is being questioned as details emerge. Iran insists it will retain "management" of the strait, controlling vessel transit, while Israel has launched a frantic diplomatic effort to scuttle the agreement.

Israel Sounds Alarm

The proposed terms have been described as "terrible for Israel" by the country's Channel 12 News, prompting Prime Minister Benjamin Netanyahu to convene emergency meetings with security chiefs. Israeli officials reportedly believe the deal is being pushed by a US envoy determined to avoid a new war "at all costs." Netanyahu had previously urged Trump to abandon the agreement in favor of renewed military strikes against Iran, according to media reports. The pushback extends to Washington, where several senior Republican senators have criticized the alleged terms as a "nightmare for Israel."

Regional Diplomacy Intensifies

The potential breakthrough follows intense regional mediation. Pakistan's army chief, Field Marshal Asim Munir, concluded a "brief but effective" visit to Tehran, with talks reportedly bringing the parties closer to a final understanding. Concurrently, Iranian Foreign Minister Abbas Araghchi has held discussions with his Omani counterpart and Pakistan's army chief to prevent further escalation. Trump also held calls with leaders from Saudi Arabia, the UAE, Qatar, Turkey, and Egypt, who reportedly urged him to accept the deal for the sake of regional stability.

The stakes are high, centering on the Strait of Hormuz, through which about a fifth of the world's oil passes. The successful transit of the Japanese-managed Idemitsu Maru, carrying around 2 million barrels of crude, highlights the commercial importance of the waterway. Yet, risks remain, with the UK Maritime Trade Operations reporting continued security incidents near Yemen's Socotra island, underscoring the fragility of the maritime routes the deal seeks to secure.

This article is for informational purposes only and does not constitute investment advice.