The United States and Iran have signed a memorandum of understanding (MoU) aimed at ending months of conflict triggered by the US-Israeli strikes on Iran, with a ceremony set for Friday in Switzerland to launch a 60-day negotiation period.

US President Donald Trump signed the document in France on Wednesday after he attended the G7 summit, while Iranian officials confirmed the agreement had also been signed in Tehran.

The deal calls for Iran to dilute its stockpile of enriched uranium under United Nations supervision, while allowing the country to resume oil sales. 

Sanctions would be lifted if a final agreement is reached after the negotiation period.

Pakistan Prime Minister Shehbaz Sharif said the agreement took effect immediately, with Iran reopening the Strait of Hormuz and the United States lifting its naval blockade.

Iran, however, reiterated it would impose fees on ships using the strategic waterway after the 60-day period.

Oil prices fell more than two percent Thursday following reports of the agreement.

Trump warned that military action would resume if Iran failed to comply with its obligations.

Meanwhile, fighting continued in Lebanon despite expectations that the agreement would help end hostilities across the region. 

The Israeli military reported one soldier killed and seven wounded in southern Lebanon, while Prime Minister Benjamin Netanyahu said Israeli forces would remain in the country.