Iran has agreed to stop producing uranium enriched close to the level required for nuclear weapons, a sign the Islamic Republic may be ready to resolve a standoff with the West over its atomic activities. 

Monitors from the International Atomic Energy Agency said Tuesday that Iran has begun implementing measures “aimed at stopping the increase of its stockpile,” according to a 12-page report seen by Bloomberg News. The Islamic Republic’s engineers have already taken the first steps necessary to cap output, the IAEA wrote.

Oil futures promptly dropped roughly 50 cents following the report of Iran’s restraint, trading little changed on the day near $73.25 a barrel in London.

Iran’s commitment followed discussions between IAEA Director General Rafael Mariano Grossi and Iranian President Masoud Pezeshkian this month in Tehran. While the IAEA still needs to finalize investigations into past Iranian activities, a cap on Iran’s stockpile “would be important” to start rebuilding trust, Grossi wrote in the report.

Iran began enriching uranium at up to 60% levels in 2021. That material could quickly be upgraded to the 90% level typically used in nuclear weapons, prompting concern across Europe and the U.S. 

The IAEA’s safeguards report is the last before US President-Elect Donald Trump takes office in January, and speculation has been rife about how his administration will address relations with Iran. During his first term which ended in 2021, Trump withdrew the US from an international agreement that capped Iran’s nuclear activities in exchange for sanctions relief, imposing a policy on the Islamic Republic dubbed “maximum pressure.”

“It is an early olive branch but also a signal that Iran is willing to negotiate over its nuclear program,” said Vali Nasr, a former senior advisor to the US State Department and professor at Johns Hopkins School of Advanced International Studies. “It is directed at the U.S., since change in Washington will decide the next chapter in Iran’s relations with the West.” 

Under President Joe Biden, Iran has become increasingly embroiled in conflict with US ally Israel. The two countries have twice exchanged direct fire this year, including last month, while Tehran-backed militant groups have been battling Israel in both Lebanon and Gaza.  

IAEA monitors said Iran has held back from feeding uranium into new lines of advanced centrifuges at its Fordow enrichment facility, built into the side of a mountain, which Israel has threatened to attack. Speaking after meeting Grossi last week, Pezeshkian said Iran wants to resolve “ambiguities and alleged doubts about our country’s peaceful nuclear activities,” according to the state-run Islamic Republic News Agency. 

Iran still has enough fuel on hand to produce a handful of warheads, the IAEA said, giving it room to maneuver should its leadership make a political decision to move forward with nuclear armament. Inspectors have lost “continuity of knowledge” over key parts of the country’s nuclear work, which would need to be restored as part of a broader deal to control and oversee activities, they said. 

The IAEA’s 35-member board of governors is scheduled to convene in the Austrian capital of Vienna on Wednesday to discuss Iran’s nuclear work.