Iran is waiting for an official US response to a proposal, transmitted through Qatari mediators, that would reopen the Strait of Hormuz and pause regional fighting within seven days of acceptance. The Wall Street Journal reported Saturday that President Donald Trump had rejected the deal, though Tehran says it has received no formal answer.
Iranian Foreign Minister Abbas Araqchi confirmed at the United Nations in New York that the proposal had been passed to Washington through Doha. Under the framework, the strait would reopen after a seven-day countdown once specific conditions are met, and both sides would restart talks aimed at a final agreement. A senior Iranian official cautioned there would be no flexibility on the nuclear program even if the strait offer is accepted.
The diplomacy follows a proposal Iran raised at the UN General Assembly this week. Tehran says it could reopen the strategic waterway and end hostilities in the wider Middle East war within seven days of a US green light. The war began on February 28 after US and Israeli strikes on Iranian targets, and has disrupted one of the world’s most critical shipping lanes for seven months.
Oil market reaction
Crude prices fell about 2 percent on Friday as negotiators explored the phased exit from the war. Brent settled at $104.32 a barrel, down 2.1 percent, while West Texas Intermediate dropped 2.3 percent to $92.41. For the week, Brent eked out a gain of less than 1 percent while WTI lost roughly 8 percent.
The declines reflect a market pricing in easing tensions rather than actual recovered supply. Ship-tracking data from Kpler showed crude flows through the strait reached 33.7 million barrels in the week starting September 20, roughly flat with the previous week. Before the war, about 20 percent of the world’s oil supply moved through the waterway.
Traders are also watching a potential US ban on diesel exports and fresh Houthi strikes against Saudi Arabia. Six ballistic missiles were intercepted over the kingdom on Thursday. Saudi Arabia has increased east-west pipeline flows while tanker loadings at Yanbu on the Red Sea remain suspended.
| Benchmark | Friday settle | Change | Week |
|---|---|---|---|
| Brent | $104.32 | -2.1% | +1% |
| WTI | $92.41 | -2.3% | -8% |
Flows recovering without a deal
Iran’s grip on the chokepoint is weakening even without diplomacy. Oil flows through the strait have topped 13.5 million barrels a day on a seven-day average, according to Commodity Context’s tally of Kpler data, against about 2 million b/d at the war’s low in March and roughly 20 million b/d before the conflict.
Saudi Arabia is shipping more crude than at any time since the war began. Its exports averaged 5.28 million b/d in the first 23 days of September, the highest of the conflict, according to Bloomberg tanker tracking. About 3.4 million b/d of that loaded in the Gulf, against almost nothing in the spring, when the kingdom moved most exports to the Red Sea.
The recovery weakens Tehran’s main lever. Iran has used its hold over the strait to push up prices and press Washington to lift its naval blockade, but with two thirds of pre-war volumes moving again, the threat of closure is worth less. President Masoud Pezeshkian told the UN General Assembly that Iran will not allow free passage, yet Saudi tankers are moving regardless.
Analysts said the market is pricing in easing geopolitical tensions, with attention now focused on whether the strait and Red Sea shipping lanes actually resume normal operations. The widening spread between Brent and WTI, at its highest since May, signals traders expect US refiners to process less medium and heavy crude while the disruption lasts.
Costs stay elevated
Shipping through the strait remains expensive. Saudi Arabia’s energy ministry blamed Iranian attacks and disruption at Hormuz for a jump in freight costs on September 22. Iraq’s oil minister told parliament the cost of moving Iraqi crude had risen to $37 a barrel from $26.
The refined product picture has not recovered with crude. Diesel supply from the Middle East was down about 773,000 b/d year over year between March and August, and Russian supply by roughly 348,000 b/d, a combined loss near 1.1 million b/d, according to estimates compiled by The Kobeissi Letter from Vortexa, Kpler and Energy Aspects data. US distillate stocks sit 11.9 percent below the five-year average, while gasoline stocks are 5.6 percent below.
Vitol estimates roughly 2 million b/d of Middle East crude exports remain lost, with another 2 million b/d of Russian supply affected by attacks on energy infrastructure. Those deficits explain why prices stay elevated despite the diplomatic optimism. Fitch Ratings expects global oil markets to return to oversupply once the strait fully reopens, with the surplus building from recovered Middle East production and non-OPEC growth.
What happens next depends on Washington. A US official described the discussions as positive and constructive, and noted nearly 40 million barrels have moved through the strait under American escort in the past 48 hours. If the US confirms the rejection, the seven-day offer lapses and the risk premium returns. If negotiations continue, prices could keep sliding as traders bet on restored flows. Either way, the war’s economic cost, in freight, insurance and missing diesel, is already baked in for months.
Iranian officials have framed the offer as time-limited. The seven-day countdown, Araqchi said, triggers only on US acceptance, and Iran has signaled it will not hold the offer open indefinitely. Mediators in Doha and New York are working to establish whether the reported rejection is a final decision or a negotiating position.