Hormuz Deal Collapse: Iran Hits Trump With New Demands

President Donald Trump thought he was close to a political breakthrough in the Iran war. Tehran apparently had other plans, resulting in the Hormuz deal collapse. For weeks, Trump had been preparing to declare victory if Iran fully reopened the Strait of Hormuz, even if Washington failed to secure an immediate agreement dismantling Tehran’s nuclear program, according to U.S. officials cited by the Wall Street Journal.

Now that strategy is in danger of collapsing.

Iran has dramatically raised the price for reopening the world’s most important oil chokepoint, demanding sweeping American concessions that include an end to the war, removal of the U.S. naval blockade, sanctions relief, compensation for war damages and the withdrawal of American forces from the region.

The apparent Hormuz Deal Collapse exposes a major problem for Trump: The military campaign that was supposed to force Tehran into submission may instead have given Iran enormous economic leverage.

Iran Presents Trump With a Massive Bill

Iranian officials have made clear that an agreement between Tehran and Oman over shipping lanes is not enough to reopen the strait.

Iran’s Foreign Ministry said Sunday that the Oman framework was in its “final stages,” but insisted implementation depended on the United States taking additional steps. Reuters reported that Tehran is demanding compensation for American attacks, relief from sanctions and the blockade, and an end to military action against Iran and its regional allies.

Other reporting has described an even broader list of conditions.

Among the demands attributed to Iran are:

• a permanent end to U.S. military operations against Iran;
• termination of the American naval blockade;
• broad sanctions relief;
• release of frozen Iranian assets;
• compensation or reparations for war damage;
• withdrawal of U.S. military forces from the region;
• an end to attacks against Iran’s regional allies;
• recognition of a greater Iranian role in controlling traffic through the Strait of Hormuz.

Several of these demands have been independently reported by major outlets, although the precise wording and number of conditions differ between accounts.

For Washington, many appear close to nonstarters.

Trump Was Ready to Declare Victory

The timing is particularly painful for the White House.

According to the Wall Street Journal, Trump had privately discussed declaring the Iran war a success if unrestricted commercial shipping returned to Hormuz. He was even prepared to move forward without first securing the nuclear agreement that had originally been presented as one of the central objectives of the war.

That would have represented a dramatic lowering of the bar for victory.

When the war began, preventing Iran from obtaining a nuclear weapon was at the center of Trump’s justification for military action. Five months later, reopening an oil route that was largely functioning before the conflict has become the administration’s most urgent diplomatic objective.

The reason is economic as much as strategic.

The Strait of Hormuz carried roughly one-fifth of global petroleum consumption before the fighting. Its disruption has driven up oil, shipping and insurance costs and contributed to sharply higher gasoline prices in the United States.

With congressional elections approaching in November, Trump has powerful political incentives to get energy prices down.

Hormuz Deal Collapse: Iran Believes It Has Leverage

Tehran appears to understand the pressure.

Iranian officials increasingly argue that Washington needs an agreement more urgently than they do. The regime can continue limiting shipping and threatening vessels while the economic consequences spread through global markets.

That gives Iran something it largely lacked at the beginning of the war: bargaining power.

The Wall Street Journal reported that Tehran believes Trump’s desire to end the conflict and reopen Hormuz makes the United States vulnerable to increasingly ambitious demands.

The White House publicly rejects the idea that Iran will be allowed to control the strait or impose compulsory tolls on international shipping.

Yet even previous U.S.-Iran agreements contained major concessions.

The June memorandum called for Washington to begin lifting its naval blockade immediately, eventually remove forces from Iran’s vicinity, provide sanctions relief and negotiate a massive reconstruction and development package if a final settlement was reached. Iran, in return, was supposed to provide safe commercial passage through Hormuz.

That agreement eventually unraveled.

Back to Square One

The latest Hormuz Deal Collapse threatens to leave Trump facing the same impossible choice he has confronted repeatedly during the war.

He can escalate militarily and risk more casualties, missile expenditure and higher oil prices. Or he can make concessions to Tehran and face accusations that the United States fought a costly war only to grant Iran sanctions relief, money and greater regional influence.

For Trump, there is an especially bitter irony. A reopening of the Strait of Hormuz could still provide badly needed economic relief and allow him to claim a breakthrough. But it would largely solve a crisis created during the war itself—while the original dispute over Iran’s nuclear program remains unresolved.