Despite Iran insisting that reports of a breakthrough remain speculative, diplomatic sources have indicated that Tehran and Washington are moving closer to an interim agreement that could pave the way for a broader settlement of tensions in West Asia.

According to CNN, a memorandum of understanding (MoU) between Iran and the United States is expected to be signed in Geneva, Switzerland, although Vienna has also been discussed as a possible venue. The proposed agreement is reported to include a 60-day extension of the ceasefire, the reopening of the Strait of Hormuz and a framework for further negotiations on Iran’s nuclear programme.

Two sources familiar with the discussions told CNN that Geneva is being considered for a signing ceremony, which one source described as the start of “phase two” of diplomatic engagement focused on implementing the agreement.

The reports follow remarks by US President Donald Trump, who suggested that a significant breakthrough could be finalised within days.

“We just made a great settlement of the war with Iran, and we’re going to be subject to finalisation of documents. We should get it done over the next few days. We’ll probably have a signing, maybe in Europe,” Trump told reporters in the Oval Office.

He added, “The Strait will officially open as soon as we sign, which could be soon, very soon, maybe over the weekend in Europe. I won’t be able to be there, but JD will be there, the Vice President, and some of the people. Steve Witkoff did a great job.”

CNN reported that some officials have referred to the proposed arrangement as the “Islamabad Agreement” or “Islamabad Declaration”, reflecting Pakistan’s role in facilitating contacts between the two sides. However, no official confirmation has been issued regarding the title of the agreement.

A diplomat briefed on the negotiations told CNN that both sides have agreed on the text of the memorandum, although it is still awaiting final approval. Under the reported terms, a 60-day ceasefire covering all fronts, including Lebanon, would take effect immediately after signing.

The agreement would also allow the Strait of Hormuz to reopen without transit fees imposed by Iran, ensuring the uninterrupted flow of energy exports and commercial shipping. Maritime traffic through the strategic waterway is expected to return gradually to pre-conflict levels within 30 days of the deal coming into force.

The proposed framework also includes the lifting of the US blockade on Iranian ports and limited sanctions relief. According to the diplomat, the easing of sanctions would be linked to progress in implementing the agreement and continued diplomatic engagement, though no timetable has been specified.

On the nuclear issue, the reported deal is said to address key US concerns, including Iran’s commitment not to pursue nuclear weapons and measures relating to its stockpile of highly enriched uranium. However, it remains unclear whether the agreement includes the release of billions of dollars in frozen Iranian assets, a demand that Tehran has reportedly raised during negotiations.

Iran, meanwhile, has sought to play down reports that a final agreement has been reached. Speaking to Iranian state media, Foreign Ministry spokesperson Esmail Baghaei said discussions were continuing and no definitive deal had yet been concluded.

According to Press TV, Baghaei acknowledged that Qatar and Pakistan remain actively involved in mediation efforts but said negotiations had been complicated by shifts in the US position.

“The status of the negotiations was clear to us from the beginning, and the majority of the text had been finalised, but the Americans kept changing their positions,” he said.

Reaffirming Tehran’s stance, Baghaei stressed that Iran would not compromise on what it considers its “red lines”.

Adding to signs of diplomatic progress, Pakistan’s Foreign Ministry on Friday welcomed developments in the talks. During a telephone conversation with Kaja Kallas, Pakistan’s Foreign Minister Muhammad Ishaq Dar discussed the latest state of negotiations between Iran and the United States.

In a statement, Pakistan’s Foreign Ministry said both sides “welcomed the progress achieved through sustained diplomatic engagement and expressed hope that these efforts will soon lead to a durable understanding and peaceful resolution.”

While officials in Tehran continue to caution that no final agreement has yet been secured, diplomatic activity surrounding the proposed deal has fuelled expectations that a significant step towards easing regional tensions could be announced in the coming days.