Iran war: Oil remains well supported as Trump rejects Iran’s proposal

Crude oil prices have traded higher, following news that US President Donald Trump has rejected Iran’s peace proposal to reopen the Strait of Hormuz.

IMAGE: Getty Images

Last week, at the United Nations General Assembly summit, Tehran proposed a seven-point prerequisite for reopening the Strait of Hormuz, demanding that the US lift its naval blockade on Iranian ports, ease all economic sanctions and release frozen Iranian assets.

Brent crude’s price surged above the $105/bbl threshold after Trump dismissed the proposal. Moreover, Trump said he is considering a resumption of military operations against Iran after the US mid-term elections, which are scheduled to take place in November, the Wall Street Journal reported.

Meanwhile, Iranian foreign minister Abbas Araghchi said in an interview with NBC News that his country is prepared to reopen the Strait of Hormuz, only if “certain things are done by the US”, clarifying that these conditions hinge on Washington accepting Tehran’s proposed peace framework.

“Iran nonetheless remains steadfast in the face of any aggression—even if it comes to an apocalyptic war. At the same time, we are ready for real diplomacy,” Araghchi said on social media platform X.

Notably, US and Iranian officials held separate talks with negotiators yesterday, raising some hopes of renewed efforts to end the conflict, Reuters reported. However, there is no confirmation that these discussions will yield a tangible breakthrough.

The latest developments reinforce expectations of a protracted conflict, cementing prolonged disruptions to commercial vessel navigation through the Strait of Hormuz.

Contested waters: US and Iran clash over Strait of Hormuz authority

Yesterday, a senior member of Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed Tehran exercises full control over the Strait of Hormuz through its naval forces.

The US Central Command (CENTCOM) categorically rejected the assertion shortly after, dismissing it as a “false” narrative.

“Iran does not control the Strait of Hormuz as evidenced by the thousands of ships that have passed through freely,” the US CENTCOM said on X, adding that more than 1 billion bbls of crude oil has transited the region in “just over the past few months.”

As of yesterday, 11 vessels attempted to transit the strait – nine inbound, two outbound, market intelligence provider Windward reported, noting that daily activity remains well below the pre-war average of 140 daily transits.

Fifty-five transits [through the Strait of Hormuz] were recorded 16-23 September, about 94% below pre-war traffic of roughly 910 a week, even as export volumes are reported back near pre-war levels, Windward reported.

By Aparupa Mazumder

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