The United States and Iran have agreed on the wording of a peace deal to end their war in the Middle East. Pakistan's Prime Minister confirmed on 12 June 2026 that both sides have agreed on the final text, according to AP News. The two countries are expected to sign the agreement within days.

Pakistan played a crucial role in making this happen. For over a year, Pakistani officials passed messages back and forth between Washington and Tehran, keeping talks alive. This matters because Pakistan's economy relies on oil and money sent home by workers in the Gulf, so a lasting peace agreement serves Pakistan's own interests.

What the Deal Actually Says

The agreement covers three main things: nuclear weapons, shipping through a critical oil chokepoint, and money Iran had frozen in other countries.

First: nuclear weapons. The Trump administration has said Iran must agree never to build a nuclear weapon. This is a firm requirement; there is no wiggle room.

Second: the Strait of Hormuz. This is a narrow waterway—just 21 miles wide—through which roughly one-fifth of the world's oil travels by ship. Since the war started, Iran has blocked or severely disrupted shipping through this strait. Under the deal, Iran will reopen it to normal pre-war shipping levels within one month of signing. Think of it like a toll booth on a highway that's been closed: when it reopens, traffic flows again, and costs fall.

This matters to your wallet. Because the strait has been closed, oil prices have stayed artificially high. Ships carrying oil also pay extra insurance—kind of like paying a premium on car insurance during a natural disaster. When the strait reopens, both the oil prices and those extra insurance costs should fall. That eventually feeds into lower gas prices at the pump.

The deal also mentions a 60-day ceasefire period during which the strait will reopen gradually rather than all at once. Spreading the reopening out over time helps prevent a sudden shock to markets.

How We Got Here

Getting to this point took a long time and a lot of tough talk. As recently as late May 2026, the US was still launching military strikes while diplomats were negotiating—a strategy designed to show Iran that Washington was serious. The US Secretary of State said publicly that if talks failed, the US would "find another way," meaning military action.

But the Trump administration had clearly decided on the outcome it wanted. By late May, the President said the framework was "largely negotiated." By the end of the month, he called a meeting to make a "final determination" on the deal.

The critical unknown now is whether this agreement actually holds. Markets have assumed a deal was coming for weeks, so the announcement alone may not move prices much. The real test is whether Iran actually reopens the strait on schedule and whether the ceasefire stays in place. If both happen, gas prices and shipping costs should fall noticeably. If the ceasefire breaks down, all bets are off.