President Donald Trump stated that concerns over a potential global economic collapse influenced his decision to sign an interim peace deal with Iran. The memorandum of understanding, signed on Wednesday, aims to reopen the Strait of Hormuz and includes sanctions waivers for Iran's oil sales. Following the announcement, oil prices decreased, and U.S. stock markets saw an uptick. At a press conference in Evian, France, Trump remarked, "I didn’t want to see economic catastrophe."
This admission may weaken the U.S. negotiating position as discussions are set to resume in Switzerland on Sunday. The agreement allows for a 60-day period to negotiate limits on Iran's nuclear program and economic relief for Iran. Analysts suggest that Trump's reluctance to escalate military action could reduce pressure on Iran to conclude talks quickly.
Iran has already announced the closure of the Strait of Hormuz in response to tensions with Israel and Lebanon. A prolonged conflict could lead to significant global economic downturns, as indicated by a recent University of Maryland poll showing that 56% of Americans believe the war in Iran has negatively impacted U.S. interests.
With midterm elections approaching, Republican lawmakers have expressed concerns, and the House voted earlier this month to halt military actions in Iran. Chris Kennedy from Bloomberg Economics noted that the terms of the memorandum favor Iran, with 10 out of 14 points benefiting Iran. The U.S. is set to grant sanctions waivers for Iran to resume oil exports and provide a $300 billion development program.
Iran's main concession is reaffirming its commitment not to pursue nuclear weapons, a promise made under the 2015 nuclear deal. The agreement allows for an extendable 60-day negotiation period, which may prolong discussions, potentially benefiting Iran more than the U.S. Miad Maleki, a former U.S. Treasury sanctions official, stated that the U.S. has diminished its economic leverage at a critical time.