US-Iran 60-day deal hits impasse over Khamenei approval

Conflicting US and Israeli media reports reveal a 60-day US-Iran ceasefire deal remains unsigned as Iran's Supreme Leader has yet to approve the memorandum.

A 60-day US-Iran memorandum to extend the ceasefire and launch nuclear talks remains unsigned after Israeli media reported Iran's Supreme Leader Mojtaba Khamenei has not approved the deal, a key reason President Donald Trump has yet to greenlight it.

"Some progress has been made," US Secretary of State Marco Rubio said of the negotiations, while cautioning that Washington still has "other options" if diplomacy fails.

The uncertainty has whipsawed markets. Brent crude fell as much as 5% to below $95 a barrel on Wednesday after Iranian state media reported a draft framework, then rebounded above $96 on Thursday as the lack of final approval became clear. The S&P 500 erased early losses on the initial deal optimism before paring gains, while the dollar index slipped below 99.5.

At stake is the Strait of Hormuz, through which about 21% of global oil trade passes. The proposed MoU would require Iran to restore commercial shipping to pre-war levels within 30 days and clear mines from the waterway, while the US would lift its naval blockade. Without Khamenei's approval, those terms remain theoretical — and the risk premium embedded in crude prices stays elevated.

The Internal Divide in Tehran

The reported impasse highlights a familiar gap between Iran's diplomatic negotiators and its ultimate decision-making authority. Foreign Minister Abbas Araghchi, Parliament Speaker Mohammad Bagher Ghalibaf, and US Middle East envoy Steve Witkoff may have reached a technical consensus, but the clerical leadership has not signed off, according to Israeli media.

Iran has long maintained red lines on its nuclear program, enriched uranium stockpiles, and the Strait of Hormuz. The proposed framework would require discussions on enrichment within 60 days — a topic the Supreme Leader has historically treated as non-negotiable. Tehran is also seeking the release of $24 billion in frozen assets as a condition for any deal, with $12 billion due immediately upon signing a memorandum, according to a Telegraph report citing sources close to the negotiating team.

Markets Price the Binary Outcome

For investors, the contradiction between US and Israeli media reports has created a binary scenario. If the MoU is ultimately approved, the removal of the Strait of Hormuz blockade would likely push Brent crude toward $85 to $90 a barrel, unwind inflation hedges, and boost equities exposed to lower energy costs. If it collapses, the risk of renewed military escalation would re-inflate the geopolitical risk premium.

The last time US-Iran hostilities escalated in April, Brent crude surged above $105 a barrel, the S&P 500 fell more than 3 percent in a single week, and the VIX spiked above 30. The current VIX remains below 20, suggesting markets have not fully priced in a breakdown scenario.

US inflation data adds another layer. The personal consumption expenditures price index rose 3.8 percent in April from a year earlier, the fastest pace since May 2023, driven in part by higher energy costs from the conflict. A failure to secure a deal would keep upward pressure on inflation, complicating the Federal Reserve's path — OIS markets currently price no rate cuts through year-end, with some traders seeing a 25-basis-point hike in December as possible.

This article is for informational purposes only and does not constitute investment advice.