President Donald Trump on Thursday said the United States and Iran could sign a peace deal as soon as this weekend that would reopen shipping traffic through the Strait of Hormuz.

The agreement, if finalized, would be the most significant diplomatic breakthrough yet to end the three-month-old war, which has killed thousands of people and sent global energy prices sharply higher.

Iran’s semi-official Fars news agency reported that Tehran is likely to approve the agreement, though it has yet to give a formal response.

“We just made a great settlement of the war with Iran,” Trump told reporters at the White House.

“The strait will officially open as soon as we sign, which could be soon, very soon, maybe over the weekend in Europe,” he said. Vice President JD Vance could sign for the United States, Trump added.

When asked if Iran’s Supreme Leader Ayatollah Mojtaba Khamenei has approved the deal, Trump said: “I understand the answer is yes.”

Trump’s announcement came after he called off planned military strikes on Iran, citing progress in talks.

Since mid-March, Trump has repeatedly claimed that a deal with Iran to end the war is close. The two sides have traded strikes throughout the week, straining a ceasefire announced in April.

“It’s a very strong memorandum of understanding that is a little conceptual,” Trump told reporters.

Trump has repeatedly said that any peace deal must ensure Iran cannot develop a nuclear weapon.

Iran’s demands include the lifting of international sanctions, the release of billions of dollars in frozen assets and recognition of its control of the Strait of Hormuz.

“We have a deal that Iran will never have a nuclear weapon, which was the whole purpose of what we had to go through to get this. So it was a very big thing,” he said on Thursday.

Regional Leaders Back Deal, Says Trump

Iranian and Western sources said earlier on Thursday that efforts to reach an interim deal ​to end hostilities had intensified.

Three Iranian sources said a political understanding had been reached, but some issues remained to be discussed in detail.

Critics within Trump’s Republican Party have said any agreement must close Tehran’s path to developing a nuclear weapon. Opposition from Iran hawks helped derail a previous effort to secure a deal to open the strait.

Analysts have said Trump is concerned that any deal will be compared with a 2015 agreement that he criticized as overly lenient. Trump pulled the U.S. out of that accord in 2018 during his first term in office.

Trump said on social media the agreement had been approved by “the highest level” of Iranian leadership, as well as other countries in the region including Israel, Saudi Arabia, Qatar and the United Arab Emirates.

Trump and Israel’s Prime Minister Benjamin Netanyahu spoke on Thursday.

Israel is “not a party to the memorandum of understanding”, and Netanyahu expressed his appreciation for Trump’s commitment to securing a final deal that includes resolving the issue of enriched nuclear material, according to a readout from Netanyahu’s office.

Trump also told reporters that he would soon talk to Turkey’s President Tayyip Erdogan.

U.S. stocks rose and oil prices fell on the news.

The war has killed thousands of people, mainly in Iran and Lebanon, and pushed up global oil prices since the U.S. and Israel launched airstrikes on Iran on February 28.

(Reporting by Reuters bureaus; Writing by Andy Sullivan and Costas Pitas; Editing by Cynthia Osterman and Don Durfee)