U.S.-Iran framework deal includes $300bn fund and plan to reopen Strait of Hormuz

The United States and Iran have agreed on a framework deal that would end their war, reopen the Strait of Hormuz and create a $300 billion private investment fund, according to a source with direct knowledge of the talks. The arrangement is being prepared for signing on Friday, and officials on both sides said on Sunday they had reached the outline of an agreement. The deal would also halt the U.S. blockade of Iran, marking a significant shift in a conflict that began after U.S. and Israeli forces attacked Iran on 28 February.

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The proposed fund is described as a private investment vehicle rather than a reconstruction or reparations programme. The source said more than half of the $300 billion has already been committed, with companies based in the U.S., Gulf Arab states, Asia, South America and Africa among those agreeing to provide financing. The pledged investments are said to cover energy, logistics, manufacturing and transport, and the fund is intended to give both sides an economic incentive to conclude a final deal.

A senior Iranian source said Tehran had originally sought $400 billion as compensation for war damage, but Washington rejected that demand. The idea for the Reconstruction and Development Fund then emerged, with the mechanism expected to involve regional countries through loans, credit lines or direct financing for damaged sites. Those sites are said to include the Mobarakeh Steel complex, refineries, airports and wider infrastructure affected by the conflict.

The source also said the fund would not include any government money or grants. The reopening of the Strait of Hormuz would be closely watched by energy markets because the waterway is a key supply route for global oil and gas. Any change to its status can affect shipping confidence, insurance costs and the movement of cargoes well beyond the region.

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Iran is also one of the Middle East's largest economies and has long been constrained by sanctions and limited access to global capital markets, which makes any large-scale financing arrangement politically and economically significant. The reported framework comes against a backdrop of long-running tensions between Washington and Tehran, as well as the wider impact of the war on regional infrastructure and trade. The source said the fund is separate from any government-backed reconstruction plan, suggesting the parties are trying to separate commercial investment from formal state compensation.

If confirmed, the arrangement would also bring in a broad range of private actors from several regions, underlining the international scope of the proposed settlement. What remains unclear is how the final text will address enforcement, the timing of the blockade's end and the practical steps needed to reopen the strait. It is also not clear which companies have committed funds, how the investment vehicle will be governed or how the pledged money will be deployed.

The main immediate watchpoint is whether Washington and Tehran sign on Friday as planned and whether the framework holds once the details are made public.

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