Iran vowed Monday to keep fighting when it deems necessary after President Donald Trump rejected Tehran’s latest response to a U.S. peace proposal, a setback that deepened uncertainty over the war, the Strait of Hormuz and global energy supplies.
Trump called Iran’s reply “totally unacceptable” on Sunday and did not publicly explain which parts of the response he opposed or what Washington would do next. Iran said its counterproposal, sent through mediator Pakistan, asked for no concessions and sought only what it called the country’s legitimate rights.
The diplomatic impasse matters far beyond Washington and Tehran. Oil prices jumped after Trump’s rejection, with benchmark Brent crude reported around or above $100 a barrel in early trading, while the critical Strait of Hormuz remains heavily disrupted. The waterway is a gateway for Persian Gulf oil and gas producers and, in peacetime, carries about one-fifth of global oil and natural gas exports.
Where the talks are stuck
Iranian officials have framed their proposal as a bid to end fighting across the region, including in Lebanon, restore maritime security in the Gulf and the Strait of Hormuz, lift the U.S. naval blockade and release frozen Iranian assets. Foreign ministry spokesman Esmaeil Baqaei said Iran’s response was not excessive and that the United States had continued to make unreasonable demands.
“We fight whenever it is necessary,” Baqaei told reporters Monday, while adding that Iran would also use diplomacy when it considered that appropriate.
Accounts of the proposal’s details vary. Iranian media reports cited by Al Jazeera said Tehran wants an initial phase focused on ending hostilities and securing shipping before broader talks on its nuclear program and regional allies. Other reported accounts said Iran was prepared to dilute some highly enriched uranium and transfer some to a third country, while rejecting the dismantling of its nuclear facilities and a long-term enrichment moratorium sought by Washington.
The U.S. position, as described in the supplied reporting, puts Iran’s nuclear program at the center of any deal. A recent U.S. proposal would require Iran to agree not to develop a nuclear weapon, halt uranium enrichment for at least 12 years and hand over its estimated stockpile of uranium enriched to 60 percent. In return, the U.S. would gradually lift sanctions, release frozen assets and withdraw its blockade of Iranian ports. Both sides would reopen the Strait of Hormuz within 30 days of signing.
Energy shock widens the stakes
The Strait of Hormuz standoff is already rippling through energy markets. Amin al-Nasser, chief executive of Saudi Aramco, warned Monday that the shipping gridlock had caused what he described as the largest energy supply shock global markets had seen, with about a billion barrels of oil already lost to the market because of the war. He said continued disruption could cost the market roughly 100 million barrels for every week the strait remains closed.
There were signs of limited movement over the weekend: several LNG tankers and other vessels transited the strait after days with no visible tanker traffic. One Qatari LNG tanker traveled through the waterway, and Iran said another tanker had done so in coordination with its authorities. Still, Iran has demanded that vessels coordinate passage with its military, and the broader shipping standoff remains unresolved.
The strain is also reaching consumers and food systems. A United Nations task force leader warned that tens of millions of people could face hunger if fertilizer shipments do not move through the strait soon. In India, Prime Minister Narendra Modi urged citizens to work from home, use public transport or carpool, and conserve fuel as global prices rise. India imports about 90 percent of its crude oil.
What could change next
Trump is expected to discuss Iran during a visit to Beijing this week, where he is set to meet Chinese President Xi Jinping. A senior U.S. administration official said Trump was expected to press China to use its influence with Tehran to help produce a deal.
For now, the main dispute remains unresolved: Iran wants an end to fighting and the blockade before moving to wider nuclear talks, while the U.S. has insisted that Iran’s nuclear capacity and the reopening of the Strait of Hormuz be addressed as central conditions. With neither side showing clear movement, the next pressure point is whether outside mediation, market stress or further military risk changes the terms of the standoff.
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