US, Iran agree to two-week ceasefire

The United States and Iran have agreed to a two-week ceasefire proposal and will sit at the negotiation table to discuss business deals beginning Friday in Islamabad, Pakistan. Following their agreement, the US and Israel will jointly suspend drone and missile strikes on Iran, while Tehran will halt attacks on Tel Aviv, US military installations, and key infrastructure in the Middle East. The agreement on a two-week ceasefire has eased speculation of an escalation following the expiry of US President Donald Trump's 48-hour deadline, which ended early Wednesday morning (Indian Standard Time).

US announcement
While announcing the decision, US President Donald Trump said, "I agree to suspend the bombing and attacks on Iran as long as Iran agrees to the complete, immediate, and safe opening of the Strait of Hormuz." Trump described this as a "double-sided ceasefire," stating, "The United States has already met and exceeded all military objectives. The United States and Iran are far along in reaching a definitive agreement for long-term peace, and Iran's 10-point proposal is a workable basis. This two-week period will allow an agreement to be finalized."

At around 18:30 (Washington time), Trump posted on his social media account that the US and Iran were "very far along" on a "definitive" peace agreement and that he had agreed to a two-week ceasefire to allow negotiations to proceed. While it did not come at the very last minute, it was close, given Trump's 8 PM Tuesday deadline to reach a deal, failing which the US would have launched massive strikes on Iranian energy and transportation infrastructure.

Iran's agreement
All of this is contingent on Iran also suspending hostilities and fully opening the Strait of Hormuz to commercial shipping traffic, which it has said it will do without interruption. However, this level of progress was far from certain as recently as Tuesday morning, when Trump threatened the "end of Iranian civilisation, never to be brought back again."

The Pakistan-brokered peace deal was approved personally by Iranian Supreme Leader Mojtaba Khamenei, who assumed the position following the death of his father, Ayatollah Ali Khamenei, in an Israeli missile attack on February 28, 2026, marking the beginning of hostilities in West Asia. In response, Iran's Foreign Minister Abbas Araghchi said that, for a two-week period, safe passage through the Strait of Hormuz would be ensured through coordination with Iran's armed forces, provided attacks against Iran are halted—possibly reflecting growing concerns over economic devastation and infrastructure damage.

China made a last-minute intervention, urging Iran to "show flexibility." US futures indices jumped sharply after President Trump announced the ceasefire. S&P 500 futures rose 2.2 percent as of 7:45 on Tuesday in New York, while contracts on the Nasdaq 100 climbed 2.7 percent. West Texas Intermediate crude oil fell 16 percent to around US$ 95 a barrel, easing pressure on the US economy.

Significance of the Starit of Hormuz
The Strait of Hormuz, a critical waterway that handles around 20 percent of the world's crude oil supply, has remained largely closed by the Iranian leadership since the US and Israel began joint strikes on Iran on February 28, 2026. This has put global energy supplies at risk, with an estimated disruption of 11 million barrels of crude oil, along with production halts in Gulf oilfields damaged by Iranian drone and missile strikes.

The Strait of Hormuz, which separates Iran from Oman and the United Arab Emirates, serves as the only maritime gateway to the Persian Gulf and is a vital route for nearly 20 percent of global oil consumption. The US Energy Information Administration (EIA) has described it as the "world's most important oil transit chokepoint." At its narrowest point, the strait is just 33 kilometers (21 miles) wide, with even narrower shipping lanes, making them particularly vulnerable to attacks or blockades. The waterway links the Persian Gulf to the Gulf of Oman and the Arabian Sea, facilitating a significant share of global energy trade.

The history of conflict in the region underscores its strategic importance. During the Iran-Iraq War (1980–1988), a conflict that claimed hundreds of thousands of lives, both nations targeted commercial vessels in the Gulf in what became known as the Tanker War. Despite these attacks, the Strait of Hormuz was never completely closed.

More recently, in 2019, four ships were attacked near the strait off the coast of Fujairah, UAE, amid escalating tensions between Iran and the United States during Donald Trump's presidency. Washington blamed Tehran for the attacks, though Iran denied involvement. As geopolitical tensions rise once again, any disruption in the Strait of Hormuz could have severe implications for global energy supplies and prices, underscoring the region's ongoing vulnerability to conflict and instability.

DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com