Trump Demands Iran Compensation as 5-Month Hormuz War Stalls

Both Washington and Tehran now demand compensation from the other, deepening a five-month conflict that has kept the Strait of Hormuz closed.

President Donald Trump said he will demand compensation from Iran in all future negotiations, matching Tehran's claim for damages from the five-month military conflict and complicating his plan to exit the war. Trump posted on social media Aug. 10 that he had instructed his representatives to include the demand explicitly in every future round of talks, according to CCTV International.

"The Strait of Hormuz will not be reopened until the United States corrects its actions," Mohammad Bagher Zolghadr, secretary general of Iran's Supreme National Security Council, said in a statement carried by state-run IRNA. Iran has demanded the US lift its maritime blockade, withdraw naval and air force units from surrounding waters, end sanctions, release frozen assets and pay compensation for war damages before any reopening.

The mutual compensation demands mark an escalation from the memorandum of understanding the two sides reached earlier, which tied sanctions relief to a final nuclear timetable. Iran's foreign minister, Abbas Araghchi, told reporters in Tehran that "we are not currently negotiating with the United States," while acknowledging message exchange through intermediaries. The Islamic Revolutionary Guard Corps reaffirmed it would maintain control over the strait until Washington accepts Tehran's terms.

For Trump, the standoff threatens a carefully constructed exit. The Wall Street Journal reported that in recent weeks the president has considered declaring the strait's complete reopening a "victory" in the war, even without a nuclear deal. With the US midterm elections in November and energy prices a political burden, analysts say Trump is searching for a justification to end a conflict that has already seen American forces destroy three major Iranian nuclear facilities.

The stakes are concentrated in the strait, which carries roughly 21 percent of global oil trade. A prolonged closure would tighten crude supply and push prices higher, feeding inflation just as the Federal Reserve weighs the path of interest rates. Safe-haven assets such as gold typically gain in such episodes, while equities in energy-importing economies face pressure.

Oman, which shares the strait with Iran, had been working toward a joint statement and consensus on geographic coordinates to ensure safe passage for merchant vessels. Those efforts now look set to stall as Iran raises the bar. The last time the strait faced a comparable threat, in 2019 after attacks on tankers, Brent crude jumped more than 14 percent in a single session before tensions eased.

Mona Yacoubian, director of the Middle East Program at the Center for Strategic and International Studies, said Iran's recent hardline demands are making it increasingly difficult for Trump to find an exit while saving face. The United States maintains it cannot accept any Iranian measure to impose transit fees or effectively control merchant shipping, while Iran opposes even the passage of US warships through the strait.

If the two sides hold their positions, the conflict risks extending past the November midterms, keeping a geopolitical premium in oil prices and weighing on global risk appetite. If mediation through Oman and other intermediaries yields a compromise, the strait could reopen on terms that fall short of Iran's full list — but the mutual compensation demands suggest neither side is ready to blink.

This article is for informational purposes only and does not constitute investment advice.