WASHINGTON, United States (AFP) —United States (US) President Donald Trump and Iran’s president signed a deal on Wednesday meant to end the Middle East war, with Tehran agreeing to dilute its enriched uranium in return for large-scale economic relief.

Trump put his signature to the memorandum of understanding during dinner with French President Emmanuel Macron at the Palace of Versailles following a G7 summit, a US official told AFP.

“Just signed it,” Trump told reporters as he emerged from the palace.

Iranian Foreign Ministry spokesman Esmaeil Baqaei, quoted by the state news agency IRNA, said the document “was finalised with the signatures of the presidents.”

The deal aims to draw a line under the war launched February 28 by the United States and Israel, prompting Iran to counterattack with missile and drone salvos across the region — and effectively shutting down the Strait of Hormuz, a crucial waterway for the world economy.

“Now it is time to test the implementation of the agreement,” Baqaei said.

Under the text, Washington commits to immediately waiving oil sanctions crippling Iran’s economy.

And once a final agreement is reached on the Islamic Republic’s nuclear program, the United States will also facilitate the release of a $300 billion reconstruction fund supported by regional nations, the deal says.

The agreement had earlier been slated for signatures by Iran’s chief negotiator and parliament speaker, Mohammad Bagher Ghalibaf, and US Vice President JD Vance. Iran said an in-person ceremony was no longer needed.

Iran insisted the deal represented a US “failure.”

“People will see it and judge,” Ghalibaf said on state television late Wednesday, after the text was released by both sides.

Highlighting the global impact of any deal, China said Wednesday that its top diplomat had impressed on Tehran that it was “key” for all sides to “genuinely implement” their commitments.

But Trump’s decision to pull the plug on the war, in which 13 US service members were killed, and vast amounts of US ammunition stockpiles were used up, has unsettled some of his own allies at home.

The agreement is only a temporary arrangement meant to give time for starting detailed negotiations on the far more complex issue of longterm control over Iran’s nuclear power ambitions, which Washington has long suspected of harbouring a secret bomb-making program.

Trump said earlier Wednesday that he was prepared to “bomb the hell” out of Iran if they violated the agreement.

But US Senator Bill Cassidy from Trump’s own Republican Party was scathing.

“Iran’s nuclear ambitions were not curbed, and they have learned that threatening the Strait of Hormuz works,” he said. “Sanctions will be lifted, and the bombing has stopped. This is the worst foreign policy blunder in decades.”

The head of the pro-Tehran Lebanese Shiite movement Hezbollah, Naim Qassem, on Wednesday described the deal as a “great victory” for Iran.

He thanked Tehran for insisting that the truce cover Lebanon, which was drawn into the conflict when Hezbollah fired rockets at Israel on March 2 in support of Iran.

A two-month negotiating period now begins, with the much-anticipated reopening of the Strait of Hormuz as the first step.

Under the terms of the deal released by US officials, Iran will dilute its enriched uranium stocks, possibly by “down-blending on site under the supervision of the IAEA” — the UN’s nuclear watchdog.

This would lead to the more far-reaching economic assistance for Iran.

But a US official said Washington would not be required to contribute financially.

Oil prices have tumbled in recent days as optimism grew of a lasting Middle East peace agreement, but reversed course on Wednesday.

Prices briefly jumped five per cent as uncertainty spread about the signing, before stabilising later in the day.

While violence declined in Lebanon following the announcement of the deal, Israeli strikes on the south have killed at least five people since then, according to state media, which also reported Israeli raids on south Lebanon on Wednesday.

Israel’s army said five soldiers were wounded on Wednesday, one of them severely, “as a result of an explosive drone impact in southern Lebanon”, the first such announcement since the US-Iran deal.

The Israeli military also said its air force intercepted “several rockets” launched toward soldiers operating in southern Lebanon, without reporting casualties.