Trump heads to G7 as US-Iran deal hangs in balance

The Strait of Hormuz, through which 21% of global oil trade passes, remains under Iranian de facto blockade as Trump and Tehran haggle over the terms of a memorandum of understanding that would end three months of war. Trump posted on Truth Social Saturday that the deal would be signed Sunday and the strait would open "to all," but Iran's foreign ministry denied the signing timeline, and Foreign Minister Abbas Araghchi said the MoU could still change before signature.

"We are closer to a peace deal than ever before," Pakistani Prime Minister Shehbaz Sharif, whose country has mediated the talks, said on X. "With finalization likely expected in the next 24 hours, Pakistan is preparing for the electronic signing of the peace deal." Sharif said technical-level talks would follow next week.

The uncertainty has kept Brent crude elevated near recent highs, with traders pricing in a potential 3% or more decline if a deal is confirmed and the strait reopens. Gold has held above $2,300 an ounce as safe-haven demand persists, while the dollar index has edged lower on expectations that de-escalation could reduce demand for the world's reserve currency. The VIX, a measure of equity volatility, has remained above 20 as investors weigh the risk of a breakdown in talks.

The stakes for the G7, which opens Monday in Évian-les-Bains, extend well beyond oil prices. France has deliberately set modest expectations for the summit — Macron shifted the dates to accommodate Trump's birthday plans and French officials have suggested success means Trump simply stays for the entire event. But the summit's working sessions on the Middle East, Ukraine, and global economic imbalances will test whether the G7 can project unity when its most powerful member has spent months lashing out at NATO allies over their refusal to support his Gulf campaign.

Iran's negotiating strategy points to a tactical pause, not a settlement

Iranian statements about the MoU suggest Tehran views any agreement as a tactical pause rather than a final settlement. Araghchi said the deal has two stages: a first phase covering an end to hostilities, resumption of Strait of Hormuz traffic, and economic benefits including sanctions relief and release of frozen assets, and a second phase addressing the nuclear program. Iran is pushing to access some frozen funds early, which would reduce US leverage before nuclear talks begin.

The Ghalibaf-affiliated Khorasan outlet argued June 13 that the agreement only aims to end the current war and does not resolve underlying issues, calling it a delay of the "final battle" that gives both sides time to rebuild military capabilities. IRGC-affiliated newspaper Javan said negotiation is "not a means of repelling the enemy, it is a means of managing the enemy."

Meanwhile, Iran has escalated efforts to safeguard its highly enriched uranium stockpile. CNN reported June 13, citing five intelligence sources, that Iran has collapsed tunnels and booby-trapped entrances to HEU storage areas with explosive mines — moves designed to make any military seizure more difficult before second-stage nuclear talks.

Ukraine seeks a reset as European allies recalibrate

Ukrainian President Volodymyr Zelenskiy arrives in Évian pressing for Europe to play a bigger role in negotiations to end Russia's war, which have stalled. European diplomats see the summit as an opportunity to convince Trump that US proposals have been too favorable to Moscow. Ukraine has escalated long-range drone strikes deep into Russian territory, hitting an oil terminal in Krasnodar and an oil preparation station in Volgograd, to increase battlefield pressure ahead of the summit.

"What we are increasingly seeing is Europeans beginning to think about a life with less America," said Victor Cha, head of geopolitics and foreign policy at the Center for Strategic and International Studies in Washington.

The European dynamic has shifted since the last G7. Three member governments — Canada, the UK, and France — have suspended military export licenses to Israel in the past month, while Italy, Germany, and Japan have not. The Macron-Carney-Starmer working triangle has agreed that a co-signed communiqué paragraph on humanitarian access is preferable to a US-vetoed one, though the US has signaled it will not sign language naming "forced restriction of aid" as a contributing cause of malnutrition in Gaza.

The IPC, the UN-aligned famine monitor, projects that 132,000 children under five in Gaza will experience acute malnutrition between June and September, with 41,000 in the severe acute malnutrition category that carries a substantially heightened risk of death. The G7's Monday Middle East session will test whether the bloc can agree on a unified response.

This article is for informational purposes only and does not constitute investment advice.