The United States and Iran agreed to a two-week pause in hostilities on Tuesday, with the US saying it would suspend attacks if Tehran fully reopened the Strait of Hormuz.

US President Donald Trump said he had talked with the prime minister of Pakistan, which has been acting as a mediator between the warring parties.

"Subject to the Islamic Republic of Iran agreeing to the COMPLETE, ?IMMEDIATE, and SAFE OPENING of the Strait of Hormuz, I agree to suspend the bombing and attack of Iran for a period of two weeks," Trump wrote on Truth Social.

"This will be a double sided CEASEFIRE," Trump posted.

The price of oil fell dramatically after the announcement, with May futures for West Texas Intermediate dropping nearly 19 percent to below $92 a barrel.

"For a period of two weeks, safe passage through the Strait of Hormuz will be possible via coordination with Iran's armed forces and with due consideration to technical limitations," Iran's Foreign Minister Abbas Araghchi said.

Reuters reported that ?the US had received a 10-point proposal from Iran, which Trump called "a workable basis ?on ?which to negotiate."

"Almost all of the various points of past contention have been agreed to between the United States and Iran, but a two week period will allow the Agreement to be finalized and consummated," Trump posted.

Iran's national television called the ceasefire a win.

"It was decided at the highest level that Iran will hold negotiations with the American side in Islamabad for two weeks," Iran's Supreme National Security Council said in a statement.

"It is emphasised that this does not mean an end to the war, and Iran will accept an end to the war only when — in view of Iran's acceptance of the principles envisaged in the 10-point plan — its details are also finalised in the negotiations," the council said.

Negotiations will begin in Islamabad, Pakistan, on Friday.

shiguang@chaindailyusa.com