Iran raises demands for reopening Strait of Hormuz as Trump opts for economic pressure

Iran's hardened demands

Iran's Revolutionary Guards declared over the weekend that the Strait of Hormuz will remain closed until Washington accepts "all" of Tehran's conditions. The conditions, presented on Saturday by Mohammad Bagher Zolghadr, head of Iran's Supreme National Security Council, include an end to the war and aggression against Iran and its allies in Yemen and Iraq, lifting the naval blockade of Iranian ports, lifting all economic sanctions, unfreezing Iranian assets abroad without conditions, withdrawing US military forces from the region around Iran, and billions of dollars in US compensation for war damages.

These demands go well beyond the framework of a June memorandum, which envisioned sanctions being lifted only after a final nuclear agreement and Iranian capital unfrozen gradually by mutual agreement. Iran's new position reverses that logic, linking concessions on the strait to a much broader package. Tehran believes it has the upper hand, having observed that Trump's repeated threats of large-scale military strikes have not led to the decisive escalation that was previewed.

“Our current strategy is to keep this strait closed until the enemy accepts all our conditions.”

Trump's wait-and-see approach

President Donald Trump told Axios on Sunday that the US is "keeping low tones" with Iran and "only partially negotiating" with them. He said he is watching Iran with its "huge inflation" and the fact that "they have no money," adding that the country is in "very bad shape" economically and may struggle to pay its military. Trump reimposed a blockade on Iranian ports in the Gulf in July, which he said has worsened Iran's economic crisis. He noted that with oil prices having dropped to just above $75 a barrel, American consumers feel less economic pressure from the war.

“It will bring results. It always brings results. It's like a chess game.”

Just a week ago, Trump had been close to ordering a return to large-scale military operations against Iran, but his Axios interview contained no new military threats.

Tehran's internal dynamics

A rare meeting between Supreme Leader Mojtaba Khamenei and President Masoud Pezeshkian was disclosed on Sunday. The meeting took place in late July, at the beginning of the third year of Pezeshkian's presidency. According to the supreme leader's office, they examined "the country's problems and challenges," primarily "the current military situation and future prospects" and "economic relations with foreign partners."

Mojtaba Khamenei was injured on the first day of the US-Israeli attack on Tehran in late February, when his father and predecessor, Ali Khamenei, was killed. He has not appeared publicly since taking office in March and makes statements only through attributed announcements. Pezeshkian said earlier this week that communication with the supreme leader was "very difficult at this time."

Netanyahu rejects Gaza plan

Israeli Prime Minister Benjamin Netanyahu rejected the 15-point peace plan for Gaza on Sunday, stating there will be no Israeli withdrawal until Hamas is fully disarmed. Israel officially rejected the plan, which was supported by the United States and had been announced by Trump's Peace Council more than a week earlier. The plan envisioned the disarmament of Hamas and a gradual withdrawal of Israeli forces from Gaza.

Analysts see narrowing options

Mona Yacoubian, director of the Middle East program at CSIS, said Iran's hardline demands make it increasingly difficult for Trump to construct a decent exit from the conflict. The White House has shifted its focus in recent weeks from nuclear negotiations to reopening the strait, after attempts to fold nuclear talks into broader negotiations proved exceedingly difficult. A limited agreement with Oman for ship transit through the strait appears to be in its final stages, but Iran is hesitating to finalize it.

“The Iranians firmly believe that Trump wants to leave and is focused on opening the straits, which is why they maintain a hard stance.”