Onmanorama Explains | US-Iran peace pact: The deal, the dispute and India's takeaway

The United States and Iran have announced a preliminary peace deal to end their 107-day conflict that shook the Middle East, disrupted global oil supplies and sent energy prices soaring. The agreement has already sparked a rally in financial markets and raised hopes of a lasting ceasefire.

But beyond the headline announcement, the details remain vague. The memorandum signed by both sides is only about one and a half pages, and Washington, Tehran and Israel are already offering conflicting interpretations of key provisions. From the future of Iran's nuclear programme and the reopening of the Strait of Hormuz to sanctions relief, compensation and the fighting in Lebanon, several of the deal's most important terms remain contested.

According to reports, the memorandum has already been digitally signed by US President Donald Trump, Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf, ahead of a formal signing ceremony scheduled in Geneva on June 19.

Here's what the agreement contains, where the fault lines lie, and what it could mean for India.

What does the US-Iran deal include?
At its core, the agreement seeks to:

• Extend the ceasefire for another 60 days
• Reopen the strategically crucial Strait of Hormuz.
• Restart negotiations on Iran's nuclear programme.
• Allow international inspectors to return to Iran.
• Create a framework for sanctions relief and economic recovery.

The challenge is that many of the key operational details remain undefined.

Reopening the Strait of Hormuz
One of the most immediate outcomes of the agreement is the reopening of the Strait of Hormuz, one of the world's most important maritime chokepoints. Ships have already begun moving through the waterway, ending Iran's maritime blockade and the subsequent US counter-blockade. President Donald Trump said the route would be "completely open" by Friday, while Iranian media reported that three oil tankers and two cargo vessels had already passed through safely.

The strait connects the Persian Gulf to global shipping lanes and handles nearly one-fifth of the world's oil trade. During the conflict, restrictions imposed by Iran and countermeasures by the US severely disrupted energy shipments and rattled global markets. Yet even here, differences have emerged. Washington expects the strait to remain fully open and toll-free. Tehran, however, insists it will continue exercising joint control over the waterway with Oman and may charge what it describes as "maritime service fees".

Frozen assets and sanctions relief
Both sides agree that the deal could provide Iran significant economic relief through easing of sanctions, release of frozen assets and a proposed $300 billion reconstruction fund backed by Gulf states. However, Tehran and Washington differ sharply on the scale of those benefits. Iranian officials claim the US has agreed to halt new sanctions, temporarily waive oil sanctions, release up to $25 billion in frozen assets and work on a reconstruction plan within 60 days. Iran's Mehr news agency has separately reported that $12 billion in frozen assets would be released even before formal negotiations begin.

US officials have not confirmed those claims. Vice President JD Vance has insisted that "no US taxpayer money will go to Iran under the deal", although he acknowledged it includes a "very significant sanctions relief package". Trump has similarly ruled out direct cash payments while indicating that sanctions relief remains on the table.

What happens to Iran's nuclear programme?
The future of Iran's nuclear programme remains the most sensitive and politically charged aspect of the agreement, with both sides offering different interpretations of what has been agreed.

The US wants inspectors from the International Atomic Energy Agency (IAEA) to return to Iran, resume oversight of the country's nuclear facilities, and dismantling of Iran's stockpile of highly enriched uranium. Trump has also suggested that negotiators are discussing a 15-to-20-year suspension of Iranian uranium enrichment. Iranian officials, however, have adopted a much more cautious tone. They describe the current agreement as a temporary mechanism to stop the war rather than a final settlement. According to Tehran, the deal merely opens a two-month window for negotiations on longer-term arrangements.

Both sides have said Iran will neither produce nor acquire nuclear weapons, a commitment Tehran says it has maintained for decades. Pending a final agreement, Iranian officials say Tehran will freeze further nuclear activity, including additional uranium enrichment and the expansion of nuclear facilities.

A key point of contention is the fate of Iran's stockpile of highly enriched uranium. While Washington has pushed for the material to be removed or dismantled, a senior Iranian official said the US has agreed in principle that Iran could dilute the stockpile within the country under a future comprehensive agreement. Trump, meanwhile, said there was no immediate urgency to remove the material and that the US would retrieve it "when all is calm".

Why is Israel unhappy?
Israel was excluded from the direct negotiations, and Prime Minister Benjamin Netanyahu has reacted with visible frustration. Netanyahu argues that it was Israel's military campaign, alongside US strikes, that forced Iran into concessions. He maintains that Israeli and American attacks severely damaged Iran's nuclear infrastructure, eliminated key scientists and disrupted missile production capabilities.

"With an agreement or without one, Iran will not have nuclear weapons," Netanyahu said. At the same time, he has defended the military campaign as an "existential victory", arguing that Israel was saved from what he described as the threat of "nuclear annihilation".

The Lebanon dispute
One of the biggest disagreements concerns Lebanon. Iran insists that the agreement requires a complete ceasefire in Lebanon and an end to hostilities involving Hezbollah and Israel. Lebanese President Joseph Aoun has welcomed that interpretation.

Israel, however, rejects it outright. Netanyahu has said Israeli troops will remain in security zones in southern Lebanon, Gaza and parts of Syria for as long as necessary.

How will India benefit?
India is among the biggest beneficiaries of the deal because of its heavy dependence on West Asia for energy supplies. About 50% of India's crude oil imports, 70% of LPG supplies and 90% of LNG cargoes are linked to shipping routes through the Gulf. The 107-day conflict disrupted these supplies, pushed up energy costs, weakened the rupee and hurt trade. India's exports recorded their steepest fall in five months in March, with shipments to West Asia plunging nearly 58%.

The immediate benefit of the agreement is lower oil prices. This eases pressure on India's import bill, helps contain inflation, supports the rupee and reduces losses faced by state-owned oil marketing companies, which were reportedly absorbing ₹600-700 crore a day due to elevated crude prices.

The reopening of the Strait of Hormuz is also expected to boost trade with the Gulf, one of India's most important export markets. Exporters believe easing tensions will improve shipping reliability, create new business opportunities and support sectors such as engineering goods, petroleum products, food, chemicals, pharmaceuticals, textiles and machinery.

Will shipping costs fall immediately?
Not necessarily. Although vessels have resumed using the Strait of Hormuz, freight rates, war-risk insurance premiums and shipping disruptions are unlikely to disappear overnight. During the conflict, many ships took longer routes around the Cape of Good Hope, increasing costs and transit times. Industry experts say it could take several weeks for maritime schedules and shipping costs to return to normal.

How have global markets reacted?
Financial markets responded immediately and positively to the announcement. Oil prices fell nearly 5%, reaching their lowest levels since March. The decline reflects expectations that shipping through the Strait of Hormuz will gradually return to normal, reducing fears of prolonged supply disruptions.

The fall also unwinds part of the geopolitical premium that had pushed crude prices above $100 per barrel during the conflict and raised fears of a global inflation shock.

Equity markets rallied sharply as investors priced out the risk of a wider Middle East conflict, easing concerns over energy-driven inflation and a potential global economic slowdown. Wall Street recorded a strong relief rally, with the Dow Jones Industrial Average touching record highs.