The US and Iran signaled on Friday that an agreement to end their war was close, with a senior US administration official saying both sides had agreed on a text and that Washington ​expects to sign an initial deal in the coming days, reported Reuters.

Iranian Foreign Minister Abbas Araqchi said that while changes in the deal were still possible, the tentative agreement showed his country ‌had emerged stronger from the conflict.

"Iran is the winner of the war with the US," he said on state television.

Hours after the White House signaled optimism about a prospective agreement, CNN reported that the US military had downed multiple Iranian drones near the Strait of Hormuz.

Iran launched several attack drones that sought to disrupt commercial shipping near the strait, CENTCOM said in a post on X.

The US military said its forces “have downed all of them in recent hours as traffic flow through the strait continues unimpeded. “

“The international trade corridor remains open for transit,” CENTCOM said.

Tehran, meanwhile has also signaled that an agreement is close, with a foreign ministry spokesperson saying an “understanding has been reached on the majority of issues.” However, what Iranian officials have said about the terms of the potential agreement differ from US descriptions.

 A signed memorandum of understanding would trigger 60 more days of “technical” negotiations, according to a US official. While sources said a signing ceremony could be held in Switzerland in the coming days, Iran’s foreign minister suggested the signing could take place remotely.

Iranian news agencies had reported that explosions were heard along ​the strait in Iran's Sirik port and Qeshm island, which residents and local officials attributed to shots fired by Iranian forces to warn vessels attempting to cross the waterway without permission from the ​Revolutionary Guards' navy.

The proposed MoU calls for reopening the strait and lifting the US naval blockade on Iranian ports, sources on all sides of the talks said. ⁠Negotiations over Iran's nuclear programme - US President Donald Trump's stated rationale for starting the war - would take place afterward.

The US official, speaking on condition of anonymity, told reporters that the deal met Trump's core objectives and ​put negotiations "in a very, very good place."

Accounts of the draft proposal from Western, Pakistani and Iranian sources pointed to terms that could favor Iran, drawing criticism from Trump, who dismissed the reports as inaccurate.

While there were minor differences ​in the details, the proposals broadly offered Tehran much of what it has sought, with Trump appearing to secure little beyond the reopening of the strait, which Iran closed after the U.S. and Israel strikes in February.

Araqchi said Iran would, along with Oman, retain control of traffic through the strait, which before the war handled one-fifth of the world's oil and gas supply.

"Our sword will always hang over the Strait of Hormuz," he said.

A Western source said the deal could be signed as soon as Sunday ​by U.S. Vice President JD Vance and Iran's parliament speaker, Mohammad Baqer Qalibaf, with Geneva seen as the likeliest venue.

The U.S. administration official said Europe had been discussed as a venue for signing but no decision had ​been made.

Araqchi said the deal would be signed remotely before it is announced.

What's in the peace deal?

Draft terms of the deal described to Reuters by multiple sources indicate the US would begin releasing billions of dollars in frozen Iranian assets and waive ‌sanctions on its ⁠oil exports, in return for Iran opening the strait.

The US official said the agreement would ultimately lead to the dismantling of Iran’s nuclear program, with its stockpile of highly enriched uranium to be destroyed and removed. The terms also include an inspection regime to ensure compliance over the long term.

But Araqchi told state television that Iran, which sources said has not accepted the dismantling of its nuclear program, wanted to retain the uranium in diluted form.

“For Tehran, the only preferred solution for its highly enriched uranium stockpile is down-blending the material,” he said. The proposals include discussion of possible war reparations for Tehran ​and dropping longstanding US demands for limits on Iran's ​missile program, the sources said. The US official disputed ⁠that account.

"None of their money released until they perform. Strait of Hormuz will be open. No Iran funding of terrorist groups," said the official, who spoke on condition of anonymity. "This is what they have agreed to. This is a performance-based deal."

Israel not party to memorandum

Israel has not been part of the negotiations and Prime Minister Benjamin ​Netanyahu said his country would not be party to the agreement.

Netanyahu has clashed with Trump in recent weeks over US demands that Israel curb military action ​in Lebanon to allow Washington to ⁠reach a deal with Tehran.

Araqchi said the agreement would end the war in Lebanon, implying an Israeli withdrawal from occupied areas.

Israel's defense minister said it would not withdraw. A senior Israeli official said Israel expects to retain its freedom to act against threats.

Global ​stock markets surge; oil prices down 

Progress towards an agreement has emerged at the end of a week that brought a sharp escalation in hostilities in the Gulf, including Israeli-Iranian exchanges of fire and US strikes on Iranian targets, followed by retaliation ⁠against US bases in the region.

Global ​stock markets rose and oil prices fell on the news. Brent crude prices were down more than 3% at their lowest in ​nearly two months.

The conflict has become a political headache for the White House, amid rising fuel prices and slipping approval ratings for Trump.

Some Republicans worry that the war's unpopularity could cost them control of Congress in November's midterm elections. But many of Trump's fellow Republicans may ​have difficulty endorsing an agreement viewed as too favourable to Iran.