Peace hopes: The reopening of the Strait of Hormuz will lead to the world heaving a sigh of relief | Photo Credit: STRINGER

For the first time in nearly four months of the US-Iran-Israel war, there are strong signs that at least US and Iran are inclined to end it. In his usual bombastic manner, US President Donald Trump said on Sunday that the ‘deal’ was done, and ‘oil would flow’ through the Straits of Hormuz very soon. The details of the agreement that will likely be signed by US and Iran in Geneva on Friday are not accurately known as no written statement has been issued from either side. However, it is the first time in these months that Iran has, through its top officials, confirmed that a ‘memorandum of understanding’ has been firmed up. So, the world is faced with a realistic chance of returning to a semblance of peace, normal trade and economic activity, even if it takes a year or so to get there. Yet, there is the dark chance of Israel sabotaging any pact before the ink runs dry.

On balance, there are enough reasons for the US to end the war. It has promised and sought a 60- day ceasefire as part of the ‘deal’ to work out ‘technical details’. US inflation at 4.2 per cent in May was the highest in three years. Trump is up against a restive electorate in the upcoming mid-terms in November. A war that appears to have begun on Israel’s prodding has visibly lost all direction and purpose. Regime change has not been accomplished and Iran’s so-called nuclear stockpile (if at all it exists) has not been unearthed. Instead, the US ended up handing control of the Strait of Hormuz to Iran, and with it, control of oil supplies to the world.

Iran might have been devastated, but it has inflicted huge damage on infrastructure and oil facilities in its neighbourhood. US and Israel never looked like winning, and at least Trump needed a respectable exit. Iran too would like to recover its huge losses, but it seems to have had the upper hand in the ‘deal’ that is in the making. Meanwhile, the markets bounced back in wild relief on Monday, with the Sensex rising 1 per cent and the rupee gaining 47 paise to the dollar, while Brent crude fell over 5 per cent.

For the world, including India, the most important issue is the status of movement on the Strait of Hormuz. About half of India’s oil supplies and 70 per cent of LNG is sourced from the Gulf region. However, the statements so far do not clearly state whether movement will be levy-free. After Trump said in a social media post that movement shall be toll-free, he seems to have corrected himself later to say that the Straits will be open for demining. Iran’s state news agency has reported that the Straits will be open, subject to “Iranian arrangements”. The 60-day ceasefire is meant to work out details regarding Iran’s nuclear programme. A promise to lift sanctions on Iran, including its frozen assets, would lift world trade prospects. India would perhaps be able to curtail oil and fertilizer imports, and with it the current account deficit over the next few months. Hopefully, this may not turn out to be as bad a year for India as most expected.

Published on June 15, 2026