US President Donald Trump and Iran’s president signed an agreement on Wednesday aimed at ending the Middle East war, with Tehran committing to dilute its enriched uranium stockpile in return for significant economic relief.

Trump signed the memorandum of understanding during a candlelit dinner at the Palace of Versailles following a G7 summit, with French President Emmanuel Macron and other guests in attendance, according to video footage posted by a Trump aide.

“Just signed it,” Trump told reporters as he left the palace.

Iranian Foreign Ministry spokesman Esmaeil Baqaei, quoted by state news agency IRNA, confirmed the document “was finalized with the signatures of the presidents.”

Pakistani Prime Minister Shehbaz Sharif, whose country mediated the agreement, said on X that it “shall enter into force with immediate effect.”

The deal seeks to end the war that began on 28 February when the United States and Israel launched military action, prompting Iran to counterattack with missile and drone strikes across the region. Iran effectively shut down the Strait of Hormuz, a critical waterway for global commerce, while the US responded by blocking shipping to and from Iranian ports.

Immediate actions agreed

“As a first step, Islamic Republic of Iran will instantly reopen the Strait of Hormuz and the United States of America will immediately lift the naval blockade,” Sharif wrote.

Washington has also committed to immediately waive oil sanctions that have crippled Iran’s economy.

Once a final agreement is reached on Iran’s nuclear programme, the United States will facilitate the release of a $300 billion reconstruction fund supported by regional nations, according to the deal’s terms.

The agreement had initially been scheduled for signatures by Iran’s chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, and US Vice President JD Vance. Iran later said an in-person ceremony was no longer needed.

However, Sharif announced that an official ceremony will take place on Friday in Switzerland, with technical talks to commence afterward.

Iran claims US ‘failure’

Iran insisted the deal represented a US “failure.”

“People will see it and judge,” Ghalibaf said on state television late Wednesday, after both sides released the text.

China’s top diplomat emphasized to Tehran that it was “key” for all sides to “genuinely implement” their commitments, highlighting the global significance of any agreement.

Trump’s decision to end the war, which killed 13 US service members and depleted substantial US ammunition stockpiles, has created unease among some of his domestic allies.

The agreement is a temporary arrangement designed to provide time for detailed negotiations on the more complex issue of long-term controls over Iran’s nuclear power programme, which Washington has long suspected of concealing a weapons development effort.

Trump said earlier on Wednesday that he was prepared to “bomb the hell” out of Iran if they violated the agreement.

Republican criticism

US Senator Bill Cassidy from Trump’s Republican Party strongly criticized the deal.

“Iran’s nuclear ambitions were not curbed, and they have learned that threatening the Strait of Hormuz works,” he said. “Sanctions will be lifted, and the bombing has stopped. This is the worst foreign policy blunder in decades.”

The head of the pro-Tehran Lebanese Shiite movement Hezbollah, Naim Qassem, described the deal as a “great victory” for Iran on Wednesday.

He thanked Tehran for insisting that the truce cover Lebanon, which was drawn into the conflict when Hezbollah fired rockets at Israel on 2 March in support of Iran.

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Two-month negotiation period begins

A two-month negotiating period now begins, with the reopening of the Strait of Hormuz as the first step.

Under terms released by US officials, Iran will dilute its enriched uranium stocks, possibly by “down-blending on site under the supervision of the IAEA”, the UN’s nuclear watchdog.

This would unlock broader economic assistance for Iran, though a US official said Washington would not be required to contribute financially.

Oil prices tumbled in recent days as optimism grew around a lasting Middle East peace agreement, but reversed course on Wednesday. Prices briefly jumped five percent as uncertainty spread about the signing before stabilizing later in the day.

ALSO READ: Oil prices fall below $80 on optimism over US-Iran peace agreement

Violence continues in Lebanon

While violence declined in Lebanon following the deal’s announcement, Israeli strikes on the south have killed at least five people since then, according to state media, which also reported Israeli raids on southern Lebanon on Wednesday.

Israel’s army said five soldiers were wounded on Wednesday, one severely, “as a result of an explosive drone impact in southern Lebanon”, the first such announcement since the US-Iran deal.

The Israeli military also said its air force intercepted “several rockets” launched toward soldiers operating in southern Lebanon, without reporting casualties.

ALSO READ: Costly victory: Iran war leaves no clear winners, analysts say