Vance rules out US payments to Iran as oil prices slide 4.8%

Vice President JD Vance declared the US will provide no financial compensation to Iran under the new memorandum of understanding, as crude oil prices posted their steepest one-day decline in months on the deal announcement.

"The American media literally picks up talking points and propaganda from the IRGC that has no support in the text of the agreement," Vance said Monday on Fox News' "Hannity." "They never get a dime of American taxpayer money. Ever. Full stop. Not even close."

Brent crude futures settled at $83.17 a barrel, down $4.16 or 4.8%, while West Texas Intermediate crude dropped $4.13 to $80.75 a barrel, a 4.9% decline. The Dow Jones Industrial Average and the STOXX 600 both closed at record highs as investors priced in lower geopolitical risk premiums. The sell-off in crude marked the benchmarks' steepest one-day drop in months, reflecting the market's assessment that the reopening of the Strait of Hormuz — through which about a fifth of the world's oil passes — will ease supply constraints that had built up since the waterway's closure in February.

The MOU, signed digitally by both sides Sunday and set for a formal ceremony Friday in Geneva, outlines a three-part framework: immediate reopening of the Strait of Hormuz, a commitment by Iran to never develop a nuclear weapon, and a pathway for normalized relations if Tehran changes its behavior. Vance said the agreement is "about a page and a half" long and described it as a broad framework, with technical details to be negotiated over the next 60 days. He confirmed that a proposed $300 billion reconstruction fund for Iran would be financed by private companies and Gulf nations, not US taxpayers.

Oil markets price in supply relief

The reopening of the Strait of Hormuz represents the most immediate market-moving element of the agreement. President Donald Trump on Sunday authorized the "toll free opening" of the waterway and the removal of the US naval blockade, declaring on Truth Social: "Ships of the World, start your engines. Let the oil flow." The UK Maritime Trade Operations warned Monday that the blockade remains in effect until Friday's signing, advising vessels not to attempt crossings until given explicit direction.

The last time a major Middle Eastern waterway was disrupted by conflict, in 2022 when Russia threatened grain shipments from the Black Sea, wheat prices surged more than 20% over two months before a UN-brokered corridor was established. The current situation mirrors that dynamic in reverse: the Strait's closure since February had pushed Brent above $90 at its peak, and the deal's announcement has already unwound a significant portion of that risk premium. French President Emmanuel Macron said Monday that French forces, including the nuclear-powered aircraft carrier Charles de Gaulle, are ready to assist with mine-clearing operations in the strait.

Skepticism remains across Washington and Tel Aviv

Despite the market rally, the agreement faces significant skepticism. CIA Director John Ratcliffe, Secretary of State Marco Rubio and Secretary of War Pete Hegseth all raised concerns during internal meetings about Iran's willingness to make the nuclear concessions Washington is seeking, according to Axios. A majority of Israel's IDF and Mossad leadership oppose the deal, arguing sanctions should remain in place until the Iranian regime changes its behavior, The Jerusalem Post reported.

Vance acknowledged the distrust, telling Fox News that the administration would "verify" Iranian compliance before delivering any benefits. "If they don't do what they promise they're going to do, they don't get any benefits of the bargain," he said, adding that Trump would not hesitate to resume military action if Tehran fails to meet its obligations. "I've known President Trump for a long time. I would say that means go back and resume bombing."

The 60-day negotiation period that begins after Friday's signing will determine whether the framework can be translated into a binding agreement covering Iran's uranium enrichment program, ballistic missile development and support for proxy groups. Trump, speaking at the G7 summit in France, said the next phase "will be actually easier" than the initial round, while warning Iran would face "ultimate consequences" if it obtains a nuclear weapon.

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