WASHINGTON/DUBAI — Hopes for a deal to reopen the Strait of Hormuz have weakened after U.S. President Donald Trump rejected Iran’s demand for compensation over war damage and countered with his own demand that Tehran pay for deaths and losses linked to past conflicts, further complicating diplomatic efforts to restore shipping through the strategic waterway.
Trump said Monday that Iran should compensate the United States for deaths and damage resulting from wars, attacks and protests over decades. He also called for compensation related to deaths in Lebanon, Syria, Yemen and Gaza. The demand came after Iran said the reopening of the Strait of Hormuz would depend on U.S. concessions, including compensation, an end to sanctions and the removal of what Tehran described as U.S. military threats and a blockade. Reuters reported that Trump’s new demand had not previously been part of the negotiations.
The dispute has raised fresh doubts over whether negotiations mediated by Oman can produce an agreement that restores normal commercial traffic through the strait. Iran and Oman have been discussing a new shipping route, with Iranian Foreign Ministry spokesman Esmaeil Baghaei saying Monday that the talks were progressing smoothly and constructively and that the two sides had agreed on a route map, although technical issues remained. Tehran has nevertheless maintained that an agreement with Oman alone would not automatically reopen the waterway.
Iran has insisted that the United States must first remove conditions imposed on Tehran before the strait can be reopened. According to AP, Iranian officials have linked reopening to the lifting of U.S. sanctions and the unblocking of Iranian assets. Tehran has also sought compensation for damage caused during the conflict. The United States, meanwhile, has rejected any arrangement that would give Iran the ability to impose transit fees or exercise control over international shipping through the waterway.
The negotiations are taking place against the backdrop of severely reduced shipping through Hormuz, one of the world’s most important energy chokepoints. Reuters reported Tuesday that traffic through the strait fell to six vessels on Monday, compared with a 10-day average of about 11 vessels. Crude oil and refined product exports through the waterway averaged about 3 million barrels per day in the week ending Aug. 7, down from 4.4 million barrels per day the previous week.
The disruption has already been felt in global energy markets. Brent crude rose more than 5% on Monday following Trump’s statements and the worsening outlook for a quick agreement. On Tuesday, Brent remained elevated at around $87.51 a barrel after earlier reaching $90.03, while U.S. West Texas Intermediate briefly climbed to $84.61. Gulf stock markets also opened lower as investors reassessed the prospects for a U.S.-Iran agreement.
Trump has claimed that the United States has secured the Strait of Hormuz after clearing Iranian mines and has said the U.S. Navy now controls the waterway. Reuters, however, reported that commercial traffic remains severely restricted and described Trump’s claim that the strait was open as misleading. Iranian forces have continued to exert significant influence over shipping, while attacks and threats against commercial vessels have kept maritime risks high.
The importance of the dispute extends far beyond the region. The U.S. Energy Information Administration estimates that oil flows through the Strait of Hormuz averaged 20.9 million barrels per day in the first half of 2025, equivalent to about one-fifth of global petroleum liquids consumption and roughly one-quarter of global maritime oil trade. The strait also carries substantial volumes of liquefied natural gas, making prolonged disruption a major risk to global energy markets.
The International Maritime Organization has repeatedly warned that the security situation remains dangerous for commercial shipping. In June, the IMO said there was no reliable assurance of safe passage through the strait and urged shipowners and operators not to expose crews to unacceptable risks. The organization has also reported attacks on international shipping and the deaths of seafarers since the conflict began.
Despite the growing diplomatic friction, negotiations have not completely stalled. Qatar’s foreign ministry said Tuesday that the Oman-Iran talks on the future of shipping through Hormuz had reached an advanced stage. Oil markets have responded cautiously to such developments, with analysts warning that progress remains largely diplomatic rather than substantive and that the waterway could remain constrained unless the broader U.S.-Iran dispute is resolved.
For now, the competing demands from Washington and Tehran have made a rapid reopening of the Strait of Hormuz less certain. With energy prices rising, shipping traffic sharply reduced and the two sides still divided over sanctions, compensation and control of the waterway, the diplomatic effort faces a critical test in the days ahead.
Edgardo Hernal started college at UP Diliman and received his BA in Economics from San Sebastian College, Manila, and Masters in Information Systems Management from Keller Graduate School of Management of DeVry University in Oak Brook, IL. He has 25 years of copy editing and management experience at Thomson West, a subsidiary of Thomson Reuters.
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