Iran and the U.S. Make a Deal. What Now?

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0:33The U.S. and Iran sign a peace deal. We'll get the latest on the fate of Iran's nuclear program, what Israel makes of the deal, and how the agreement could turbocharge Tehran's oil revenues.

0:46Rebecca Feng:Iran's oil facilities haven't been damaged very, very dramatically. And also, Iran is a country that can actually bring back oil production fairly quickly. It's Thursday, June 18. I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:09President Trump is back in the U.S. following a surprise move to ink an agreement to end the Iran war over dinner last night at the G7 summit in France. Journal National Security reporter Alex Ward has been reporting from the summit and is now in Switzerland, where negotiations are set to continue. Alex, what is the current situation? It seems like all of a sudden we went from, hey, we're getting a big signing on Friday and then smash cut to, well, the agreement's actually now been signed by President Trump and he's already back in Washington. Is this thing now in effect? Boy, what a surprise this was.

1:44Yes, the deal is in effect. As of Wednesday, President Trump surprisingly signed the deal while having dinner in Versailles. and Iran says that their president has signed it as well. And so this deal is now operational. That kicks off 60 days of discussion over the nuclear file, right? Because when we talk about the Iran deal, I think we need to separate two things. We need to say this memorandum of understanding is really an agreement to reopen the Strait of Hormuz. That is really what this is about. It does set up larger negotiations over the nuclear file. And that's what's going to be happening now that this deal has been signed this weekend.

2:23You're going to see Vice President J.D. Vance and the Iran envoys Jared Kushner and Steve Whitcoff. They all are expected to arrive in Lucerne to start those negotiations. And so the Iranians will be coming as well and some mediators from the countries of Pakistan and Qatar. Starting with the Strait of Hormuz, are we seeing movement there? What should we be expecting in the next few hours and days? We've already been seeing some movement, but this is going to be a long-term process. As much as President Trump said it'll be fully reopened by Friday. That's just not how commercial shipping works.

2:54There also is the small matter of that there are mines in the strategic waterway through which about a fifth of the world's oil supply flows. So it's going to take a few weeks, at least perhaps more to get fully up and running. Now, let's also talk about the Iranian side of this equation, which is as part of this, as they call it, a memorandum of understanding. Basically, at the heart of it is a trade. Iran reopens the Strait of Hormuz, the U.S. lifts the blockade, and crucially, allows Iran to sell oil again, right? It is immediate upon the signing of the deal, which allows Iran to bring in revenue.

3:30So in effect, the Trump administration has offered Iran the incentive of making money in order to reopen the Strait of Hormuz. And so that's where we are today. Okay. And we would be expecting, I guess, Iranian oil export vessels to be passing through the straits along with all those other vessels that have been stranded there. So that's something visual, frankly, that we're going to get pretty soon, it sounds like. Yes. Now, again, the volume of it is unclear, right? If you're a shipping company, you're probably worried about the mines. You're probably worried about the viability of this, right?

4:02Do you really trust Iran? Are they going to start shooting at you again? Because we should know there are members of the Iranian regime that aren't happy with this memorandum, particularly members of the Islamic Revolutionary Guard Corps, the very powerful militia and economic force inside Iran. So will they try to play spoiler? You can also imagine that if, say, the conflict between Israel and Hezbollah were to pick up, you could imagine some leaders in Iran go, this deal is already void, let's reclose the strait. So we'll see little advancements. And the way the U.S. has designed this memorandum as they describe it is the more Iran abides by it, the more economic relief they get.

4:42Alex, I'm glad you brought up Israel there, because as we head into these 60 days of talks about Iran's nuclear program, this has been a real point of concern for Israeli Prime Minister Benjamin Netanyahu, who's wanted to see the Iranian nuclear threat sufficiently beaten back before calling it quits on the battlefield. Have we gotten an Israeli reaction to this deal so far? And is it telling that the nuclear issue is sort of not a part of this original MOU? Well, the Israelis are unhappy, right? I mean, they in large part because they agreed with President Trump's original goals for the war, which were not only just ensuring it didn't get a nuclear weapon, but also that its ballistic missile program would be decimated, that its navy would be gone, that its military capabilities removed and that its militias no longer receive funding.

5:28All we know right now is that the Strait of Hormuz is opened. Now, as we go into those talks, we cannot discount the possibility that the U.S. and Iran reach some agreement in which there are significant caps to Iran's nuclear program, that they discard its ballistic missile program, that it decides not to fund proxies anymore. That is all possible. But we are nowhere close to that. In fact, we haven't even had the first real discussions for that. To your point, the MOU, Memorandum of Understanding, left all the thorny issues to the last part, a tacit diplomatic admission that that was too hard to focus on in order to end the war.

6:07So now they're going to spend roughly two months figuring all that stuff out. However, when you hear President Trump talk about it, he says literally 99.9 % of what I care about is the nuclear stuff. So if you are his envoys, your clear message is get some sort of cap, get some sort of dismantling of the nuclear program. And if the ballistic missile stuff and the proxy militia stuff gets too hard, maybe just drop it altogether. Got it. Well, the pressure is on for these negotiators, it sounds like, to come up with some results. And that's excluding any pressure coming from Washington, right? Absolutely.

6:39There are just so many spoilers here, right? Not only the Israel-Hezbollah fight, but some people inside Iran. Then, of course, President Trump's own views here. and let alone, you know, the Iranian political situation. And as some critics of this deal have noted, beyond just the fact that the U.S. has not achieved all of its goals, or initially stated goals, I should say, critics would argue, look, you're trying to get Iran to do something which it has not really done, which is to dismantle its nuclear program entirely. If there is going to be a deal, it is more likely going to be some sort of caps on Iran's enrichment, etc.

7:11But here's what the critics would say. What incentive does Iran really have to do that if it is already going to receive revenue from oil sales. If it follows other aspects of the deal, it will start to get some money. Shouldn't starving Iran be a point of leverage? And President Trump effectively says no. It was important to him to reopen the Strait of Hormuz because he didn't want to start a new Great Depression. And he believes that the threat of perpetual military bombing, military pressure would be enough to get Iran to cave. I've been speaking to Wall Street Journal national security reporter Alex Ward in Geneva this morning.

7:44Alex, thank you so much for the update. Yeah, thanks for having me. Oil prices have dropped on news that the U.S. deal will lift sanctions on Iranian oil exports, with WTI crude trading below$75 a barrel and U.S. gasoline prices slipping below$4 a gallon. Journal Energy reporter Rebecca Fung says it's been a swift market reaction.

8:09Rebecca Feng:So in the deal that was signed, there's this language that allows Iran to immediately export is oil. This is quite a big deal just because the Iranian oil industry has been under sanctions for years. This really changes everything. Before the war, Iran was roughly exporting more than one million barrel a day, mostly to China, and it was producing 3.5 million barrels a day. So because of the war and the blockade, the US Navy blockade, Iranian oil exports in May basically dropped to close to zero. We have analysts basically saying that in the first two months, Iran's going to have about$8 billion of revenue, oil sales revenue coming in, and within the first year, more than$60 billion.

8:53That's despite prior warnings that it could take a long time for oil wells, facilities, and ports to come back to full capacity. Instead, the deal is prompting the International Energy Agency to warn of potential oversupply.

9:05Rebecca Feng:So what the IEA was warning was basically that with the deal signed and peace in the Middle East, that could bring back a pre-war situation, which is a global oil glut. The IEA is forecasting that next year, supply will increase by like 8 million barrels a day and demand will only increase by two. So now the oil glut is here again. In the short term, oil prices will still be high. But going on later in the year, probably in the third quarter or fourth quarter, we're going to see oil prices likely drop back to a pre-war level. So around$60 or$70 a barrel. And while lower prices in time for winter does sound like a good thing, Rebecca had this word of caution for those hoping for more price stability.

9:51Rebecca Feng:We've very rarely, if ever, seen price volatility like this. At the top, we had like 120, and now we're down to 75. And there's just so much back and forth. Analysts have been actually complaining that the price seems to be so detached from the fundamentals, which is a lack of supply. So going forward, I don't know how that's going to shape how oil trades, whether it will be more kind of move by headline risk or just supply fundamentals. That was Wall Street Journal energy markets reporter Rebecca Fung. Coming up, we've got the rest of the day's market news and a look at why the number of workers returning to the office full time has hit a plateau in spite of corporate mandates.

10:32That's after the break.

10:37Rebecca Feng:Not again. Another AI project has ended without any ROI. Close to cracking? Time to meet the Salonis Context Model, which provides AI the operational clarity it needs. Go to CELONIS.com slash WSJ to start getting AI ROI.

10:55U.S. markets appear to be cheering on the U.S.-Iran agreement, with stock futures pointing to a rally once trading gets underway. In Asia, markets in South Korea and Japan notched new highs on news of the deal, with the KOSPI breaching the 9 ,000 level for the first time, and the Nikkei closing above 70 ,000 in another first. Meanwhile, European markets are searching for direction, ahead of an interest rate decision from the Bank of England due shortly. Following the Fed's lead, the bank is expected to stay put, marking a break with the European Central Bank and the Bank of Japan, both of which recently raised rates.

11:31And in other markets news, we're exclusively reporting that AI startup Base 10 is finalizing a new funding round at a valuation of$13 billion. The company, which connects users to cheaper alternatives to OpenAI and Anthropic, is part of a growing Silicon Valley ecosystem that's aimed at helping unlock savings as the cost of AI usage soars. And Intel's stock has soared to an all-time high pre-market after President Trump said that Apple had agreed to work with a tech giant to design and build chips in the U.S. In a social media post, the president said that the Apple-Intel partnership was the latest step in U.S.

12:10help for Intel after the federal government took a 10 % stake in the company last year. Neither Apple nor Intel confirmed the partnership, and neither company has responded to a request for comment. However, the news could be a welcome development for Apple, after its CEO, Tim Cook, said it would have to raise prices for its phones due to the soaring cost of memory chips. Head to WSJ.com to see a breakdown of the iPhone 18 Pro's new price point, a whopping$1 ,300, or check out the link we've left in our show notes. And finally, return-to-office mandates from a number of big American corporations like JPMorgan Chase, Microsoft, Intel, and Home Depot have garnered a lot of attention in the past few years.

12:53But according to economics reporter Justin Layhart, A host of data shows that work from home could be here to stay. According to a monthly survey run by economists at Stanford and the University of Chicago, about 26 % of paid work days were done from home in May. Two years ago, it was 27%. Before the pandemic, that number was around 7%. So we've settled into a new normal that looks nothing like the old one. Research shows companies with executives under 40 during the pandemic are far more likely to embrace hybrid arrangements today. The same goes for startups, too. To put some numbers on things, about one in 10 workers are fully remote.

13:37About two-thirds of the American workforce has no choice but to be on site. And while Justin says that hybrid working arrangements remain the norm for others and can be beneficial for many, being in office still has its advantages. Research shows it's helped more mothers stay in the workforce, and Labor Department data shows substantial rise in employment among people with disabilities since the pandemic. But it's not all upside. New research published in the journal Science this month finds that remote work has made Americans lonelier and more mentally distressed. And there's forthcoming work in the quarterly Journal of Economics suggesting younger workers may be hurt most.

14:18They miss out on the informal mentorship that comes from being around senior colleagues, which could hurt their long-run career prospects. And that's it for What's News for this Thursday morning. Today's show was produced by Daniel Bach and Hattie Moyer. Our supervising producer is Sandra Killhoff, and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Otherwise, after that, we'll be back on Monday following the holiday. As always, thanks for listening and enjoy your weekend.

15:15Rebecca Feng:We'll be right back. to the trusted network for AI. Learn more at Lumen.com.