The most significant energy-supply crisis in history began to unwind dramatically on Thursday after President Donald Trump and his Iranian counterpart, Masoud Pezeshkian, separately signed an interim agreement to end four months of war and reopen the Strait of Hormuz. In an unexpected flourish, Trump put his signature to the 14-point memorandum of understanding in thick black ink at a candlelit dinner with French President Emmanuel Macron at the Palace of Versailles, on the margins of the G7 summit. Macron, who had hosted the gathering, shouted “bravo” at a venue freighted with symbolism—the palace where the treaty ending the First World War was signed. Within hours, oil prices tumbled to their lowest levels since the first trading days after the initial American and Israeli strikes on Iran in early March. Brent crude slid below $79 a barrel and West Texas Intermediate sank towards $74, as tankers carrying nearly 10 million barrels of stranded oil began emerging from the strait and Kuwait announced it would ramp up production.

Viewed from Washington, the signing was an exercise in political theatre and defiance. Trump immediately took to social media to brand critics of the deal “fools”, insisting that record-high stock markets and tumbling oil prices vindicated his approach. Those questioning his toughness on Iran were, he said, “either jealous, bad people, or stupid”. The president had earlier warned that bombs would fall “right on their heads” if Tehran did not “behave”, a rhetorical stick alongside the diplomatic carrot. In Tehran, by contrast, the mood was triumphal. Parliamentary speaker and chief negotiator Mohammad Ghalibaf hailed the accord as “a record defeat” for the United States, while state media quoted officials saying Iran had secured what it wanted “several times over”. The gap between these narratives underscored the fragility of a pact that critics and independent experts argue heavily favours the Islamic Republic.

On trading floors in London and New York, the relief was palpable but not unalloyed. Equities on Wall Street pushed higher, with the S&P 500 and Nasdaq adding more than one percent in early trading, clawing back some of the previous session’s steep losses. Yet the upbeat mood was tempered by a resurgent dollar, which hit a one-year high after the Federal Reserve raised its inflation forecast and signalled higher interest rates this year. The interplay of cheaper energy and tighter monetary policy left markets caught between two powerful cross-currents. In Asia, where economies are acutely sensitive to energy costs, the resumption of traffic through the Strait of Hormuz offered a measure of reassurance, though analysts cautioned that the full return of Iranian barrels would take time and remained contingent on the next phase of diplomacy.

That next phase begins on Friday in the Swiss Alps, where American and Iranian negotiators will sit down for a 60-day sprint to thrash out the details of a “final” agreement. The interim deal waives U.S. sanctions on Tehran’s oil and allows free passage through the strait, but the permanent terms—likely to encompass verification mechanisms, sanctions relief sequencing, and security guarantees—promise to be far more contentious. Diplomats in European capitals, who watched the Versailles signing with a mixture of relief and scepticism, note that the hard bargaining has barely begun. For a global economy still nursing the inflationary wounds of the conflict, the coming weeks will determine whether this is a genuine turning point or merely a pause in a volatile standoff.