Iran Halts Strait of Hormuz as Demands for US Concessions Mount

Negotiations over the Strait of Hormuz remain deadlocked as Iran maintains strict conditions for reopening the critical waterway. Iranian officials, including the newly appointed secretary of Iran's Supreme National Security Council Mohsen Rezaei, have declared that the strait will remain closed until the United States ends its military blockade, lifts sanctions, releases frozen Iranian assets, withdraws military forces from the region, and provides compensation for war damage. These demands were formalized on August 10 by Mohammad Bagher Zolghadr, a senior Revolutionary Guards official, and reiterate conditions that were part of a June memorandum of understanding that collapsed within a week.

The closure has caused a dramatic collapse in shipping through one of the world's most critical energy chokepoints. Before the February 28 US-Israel war on Iran, approximately 130 vessels transited the strait daily, accounting for roughly one-fifth of global oil and liquefied natural gas supplies. As of early August, that figure had plummeted to between 8 and 15 vessels per day. This disruption has kept energy markets under sustained pressure, with Brent crude oil reaching $88.91 per barrel by August 12—approximately 16 percent above pre-conflict levels. US benchmark West Texas Intermediate crude rose to $83.20 per barrel.

Parallel negotiations between Iran and Oman over a limited arrangement for managed shipping corridors have reportedly reached advanced stages, but Iranian officials have explicitly stated that any agreement with Oman would not constitute a full reopening of the strait. Foreign Minister Abbas Araghchi said on August 9 that while new routes may be established, "this does not mean the opening of the Strait of Hormuz" without satisfaction of broader political conditions.

The Trump administration has signaled a shift in strategy. On August 10, Trump told Axios that the US is "only semi-negotiating" with Iran and is instead allowing economic pressure to mount on Tehran. However, Trump has also echoed Iranian language by demanding compensation from Iran for alleged damage caused by Iranian actions over several decades, a reversal that complicates prospects for settlement. On August 12, Trump claimed the US military had achieved "100 percent" and "total control" of the strait, stating Iran "will get blown away" if it attempted to change that status—a claim contradicted by Iran's demonstrated ability to restrict traffic and by the continued closure.

Market analysts note that even if an agreement were announced, restoration of normal shipping could take weeks or months due to reduced capacity, lingering security concerns, and widespread skepticism about the durability of any accord. Pakistan's Defense Minister Khawaja Asif stated on August 11 that the US and Iran were "close to some sort of arrangement," though neither side has publicly confirmed active direct negotiations. Iran continues to deny engaging in talks with the US, characterizing any communication as exchanges through intermediaries with Oman.