US-Iran two-week ceasefire: Lebanon confusion, Strait of Hormuz dispute, and market reaction

American and Israeli forces launched strikes on Iranian military and nuclear sites in late February 2026. Iran retaliated by closing the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly 20% of the world's oil and liquefied natural gas normally flows. — a 64% increase that raised costs for consumers, airlines, and manufacturers worldwide. Hundreds of tankers remained stranded in the Persian Gulf and Arabian Sea, unable to transit safely.

On the morning of April 7, , giving Iran until 8 p.m. ET to accept a deal that included reopening the strait. The White House framed the ultimatum as a final chance for Iran to avoid a massive bombing campaign against its civilian and military infrastructure.

, based on five people with direct knowledge, that the Trump administration had privately sought a ceasefire since at least March 21 — the same day Trump first threatened to bomb Iran's power plants. Pakistani Army Chief Gen. AMAsim Munir served as the key back-channel communicator, passing messages between Iranian officials, US Special Envoy Steve Witkoff, VP JVJD Vance, and Trump himself. Gen. Munir continued this communication even while Trump posted escalatory threats on Truth Social publicly.

PM SSShehbaz Sharif publicly credited Pakistan with brokering the deal, calling it the product of 'persistent and patient' diplomacy. Trump told AFP on April 8 that Turkey, Egypt, and China had all helped facilitate the negotiations — acknowledging a broader diplomatic effort that his public announcements had not disclosed. China helped get Iran to the negotiating table, Trump said. The New Republic reported the same underlying picture: Trump had privately sought the ceasefire for weeks.

At approximately 6:15 p.m. ET on April 7 — about 90 minutes before his own 8 p.m. deadline — . The deal required Iran to agree to a 'COMPLETE, IMMEDIATE, and SAFE OPENING' of the Strait of Hormuz, with formal negotiations scheduled for Islamabad. Trump said he had reviewed Iran's 10-point peace proposal and called it 'a workable basis on which to negotiate.'

. Both sides announced the deal through statements and social media posts, without a formal document specifying its exact terms. This absence of a written agreement directly fueled the disputes that emerged within hours over Lebanon, the Strait of Hormuz toll system, and nuclear enrichment.

Iran submitted a 10-point peace proposal to the US team. VP Vance told reporters the first version was 'literally written by ChatGPT' and was 'immediately rejected.' A second, more substantive proposal — developed through back-and-forth discussions — formed the framework for the ceasefire. .

Trump rejected the nuclear enrichment demand outright. He posted on Truth Social on April 8: 'there will be no enrichment of Uranium.' White House Press Secretary KLKaroline Leavitt confirmed Trump's red line against Iranian nuclear enrichment remained in place. Secretary of State Marco Rubio had previously said the US position makes clear Iran 'can never have nuclear weapons.' even as the ceasefire took effect.

Pakistan's PM Sharif told reporters on April 8 that the ceasefire covered 'everywhere including Lebanon' — a position immediately disputed by the US and Israel. Iranian Parliamentary Speaker MBMohammad Bagher Ghalibaf echoed Sharif's interpretation and publicly accused the US of violating the ceasefire by allowing Israeli strikes on Lebanon to continue. Iranian Foreign Minister AAAbbas Araghchi also insisted Lebanon was part of the deal.

, saying: 'I think the Iranians thought the ceasefire included Lebanon, and it just didn't. We never made that promise.' Israeli PM Netanyahu separately confirmed to his cabinet that the deal didn't cover Lebanon and that Israeli operations there would continue. specifying whether Lebanon was in or out.

Iran announced it would allow ships through the Strait of Hormuz via a 'permission-based' system requiring coordination with Iranian armed forces, and planned to charge tolls in cryptocurrency. . She called reports of a closure 'completely unacceptable' and said Iran was 'offering conflicting messages.'

Iranian state news agency Fars and the IRGC reported that tanker passage halted on April 8 after Israeli strikes continued in Lebanon. : continued Lebanon strikes, a drone found in Iranian airspace, and US attempts to block Iran's nuclear enrichment program. Defense Secretary Pete Hegseth said at a press briefing: 'The strait is open.' .

as investors priced in the ceasefire and the potential reopening of the Strait of Hormuz. The Dow Jones Industrial Average gained 1,325.46 points (2.85%), its best single-day performance in over a year. The S&P 500 gained 2.51%, and the Nasdaq gained 2.80%. WTI crude oil fell 16.41% to settle at $94.41 per barrel — its biggest single-day percentage drop since April 2020. Brent crude fell 13.29% to $94.75 per barrel.

Both benchmarks remained far above their pre-war levels of about $67 per barrel from late February 2026 — a sign that markets priced the ceasefire as temporary rather than a permanent resolution. — roughly 8% of the normal daily traffic of 60 to 135 ships. About 800 vessels remained trapped beyond the strait, waiting for clarity on the toll and coordination requirements before risking transit.

, for formal negotiations toward a permanent agreement. Iran confirmed participation. The US team would be led by VP Vance, with Special Envoy Steve Witkoff and JKJared Kushner also attending. Trump told AFP that Turkey, Egypt, and China had all helped facilitate the negotiations — a broader coalition than his public statements had acknowledged.

, a significant departure from its traditionally regional role. Gen. Munir's back-channel communications with all major parties made him one of the most consequential non-Western diplomats of the crisis. The provisional name for the hoped-for final agreement was the 'Islamabad Accord.'

The ceasefire faced three simultaneous crises by the morning of April 8: continued Israeli strikes on Lebanon (which Iran said violated the deal), Iran's cryptocurrency toll system on the Strait of Hormuz (which the US said violated the deal), and Iran's demand for nuclear enrichment rights (which Trump had rejected as a red line). .

: 'The ceasefire may create transit opportunities, but it does not yet provide full maritime certainty and we need to understand all potential conditions attached.' , describing it as dependent on disputed terms that neither side had agreed to in writing. No written ceasefire agreement had been published as of April 8.