Iran just offered to reopen the Strait of Hormuz. The catch is the part Trump probably will not accept.
What Iran Is Proposing
Two regional officials told the Associated Press on Monday that Iran has put a new offer on the table, with Iran reopening the Strait of Hormuz and ending the war in exchange for the U.S. lifting its naval blockade.
Talks on Iran's nuclear program would be pushed to a later phase, which is the sticking point.
President Trump went to war with Iran on February 28 alongside Israel, in part to keep Tehran from building a nuclear weapon. Pushing nuclear talks to "later" is unlikely to land with a president who has called the program the reason for the war.
A ceasefire signed April 7 is still holding, and Trump extended it indefinitely last week, though a real settlement is still missing.
The proposal was reportedly passed to Washington through Pakistan, after Trump scrapped a planned envoy trip to Islamabad over the weekend, citing "tremendous infighting and confusion" within Tehran's leadership.
Why The Strait Matters For Markets
The Strait of Hormuz is the chokepoint for a fifth of the world's oil and gas in peacetime, and it has been closed since the war began.
Brent crude - the global oil benchmark - is trading around $108 per barrel. That is nearly 50% higher than where it was when the war started.
Tankers full of crude are stranded in the Persian Gulf because they cannot safely move through the strait to global markets.
The U.S. blockade is meant to choke off Iran's oil revenue, while Iran's strait closure is meant to make that blockade hurt everyone. So far, both are working as designed.
Gasoline prices are climbing in the U.S. ahead of the November midterms, and Gulf allies that depend on Hormuz to ship their own oil and gas are pressing Washington for a deal.
Fertilizer, food, and other basic goods are getting more expensive worldwide because of the shipping disruption.
What To Watch
Iran's foreign minister Abbas Araghchi landed in St. Petersburg on Monday to meet Russian President Vladimir Putin, with Russia long backing Tehran though it is unclear what help Moscow can offer right now.
Trump told reporters Saturday that Iran sent a "much better" proposal after he scrapped the envoy trip to Pakistan. He declined to elaborate but said one condition is non-negotiable: Iran "will not have a nuclear weapon."
The death toll since February sits at more than 3,375 in Iran and 2,509 in Lebanon, where fighting between Israel and Hezbollah resumed two days into the Iran war.
Another 23 people have died in Israel and more than a dozen in Gulf Arab states, on top of 13 U.S. service members and 6 U.N. peacekeepers in southern Lebanon.
The Israel-Hezbollah ceasefire in Lebanon, struck after fighting resumed two days into the Iran war, has been extended by three weeks. Hezbollah has not been part of the Washington-brokered talks.
Oil traders are watching for one thing: whether the strait reopens. Everything else is a footnote until it does.
