Edition 1 · The Limits of Power
Iran: the war isn’t over — and the strait still matters
Nearly seven months into the US–Israeli war with Iran, the diplomatic language has changed. The underlying problem has not.
American and Iranian officials returned to indirect talks during the UN General Assembly in New York this week, raising hopes that the conflict could finally move towards a settlement. Iran has presented a proposal under which the Strait of Hormuz could reopen within seven days if agreed conditions are met, followed by renewed negotiations towards a wider deal.1
For now, though, the two countries remain at war.
President Donald Trump used his UN address to defend the US campaign against Iran and again threatened overwhelming military action if diplomacy fails. Iranian President Masoud Pezeshkian said his country would not submit to American pressure, while still leaving the door open to negotiation.2
That combination — negotiations alongside threats of further escalation — leaves one narrow stretch of water at the centre of the global economic risk.
Why the Strait of Hormuz matters
The Strait of Hormuz separates Iran from Oman and connects the Persian Gulf to the Gulf of Oman and, ultimately, the Arabian Sea.
In 2024, oil flows through Hormuz were equivalent to roughly 20% of global petroleum liquids consumption, according to the US Energy Information Administration. This is a pre-war benchmark, not the current traffic level.3
That makes Hormuz more than a regional shipping route. It is one of the world's most consequential economic chokepoints.
The conflict has severely disrupted that system.
Iran has imposed restrictions on shipping through Hormuz, while alternative export routes have come under increasing pressure. Some Gulf producers have resorted to expensive ship-to-ship transfers near Oman to keep crude moving. Kpler expected those transfers to average around 2.5 million barrels per day in September, up from 1.4 million in August, according to a Reuters column published on 21 September.4
The consequences are showing up well beyond the battlefield.
Brent futures were quoted at $103.64 a barrel at 16:12 GMT on 25 September, as traders weighed the prospects of a US–Iran truce against continuing supply risks.5
Hormuz has therefore become both a military pressure point and an economic bargaining chip.
A possible way out
On 25 September, Iranian Foreign Minister Abbas Araqchi said Tehran had given the United States a seven-day proposal.
Under the plan, if certain conditions are fulfilled, Iran would reopen the Strait of Hormuz at the end of that period and negotiations would resume towards a broader agreement. Araqchi said the required US actions were already included in the memorandum of understanding agreed in June.1
On 26 September, Trump rejected the plan. Iran wanted a deal "because they are losing so badly", he told reporters at the White House, and its terms "would not be acceptable". The proposal would have required the United States to release frozen Iranian funds, lift oil sanctions and end its naval blockade of Iranian ports within four or five days. Araqchi said Iran "will not back down" on its conditions and was awaiting a "definitive" response through mediators.6
There are at least signs that communication is functioning.
The indirect talks on 22 September were the first known such discussions since a ceasefire collapsed in July, Reuters reported. A June agreement therefore did not produce a lasting settlement; the new proposal remained conditional.2
Events at sea underline how fragile that process remains.
On 23 September, the bulk carrier Cape Dao was attacked near the Strait of Hormuz. One Indian crew member was killed, and an Omani warship rescued 27 survivors, according to reporting citing Indian and Omani authorities.7
At the same time, Iranian officials are warning that another major American attack could broaden the conflict beyond the Persian Gulf.
Yahya Rahim Safavi, a military adviser to Iran’s supreme leader, warned on 24 September that another phase of the war could extend as far as the Indian Ocean. The statement was a threat of possible escalation, not evidence that such an expansion had occurred.8
The Red Sea is already under pressure. Reuters reported Houthi pressure on Bab el-Mandeb and disruption to Saudi Arabia’s alternative oil-export route.4
The choice now
The immediate question is no longer whether the United States and Iran can communicate.
They can.
The question is whether either side is prepared to make the concessions necessary to turn communication into an agreement.
Iran wants relief from American military and economic pressure. Washington wants the Strait reopened and a broader settlement capable of constraining Iranian behaviour. Neither side wants to appear to have been forced into retreat.
Meanwhile, every additional confrontation creates another opportunity for the conflict to widen.
The Strait of Hormuz explains why this war cannot easily remain contained to the United States and Iran. Energy markets, Gulf economies and international shipping all depend on a waterway narrow enough for military disruption to have consequences thousands of miles away.
Washington has rejected the seven-day proposal, though Tehran says it is still waiting for a formal answer.
But there is still a considerable distance between a route to a deal and a deal.
Context
How did the US and Iran get here?
From the 2015 nuclear agreement and the US withdrawal, through sanctions, the nuclear dispute and the escalation into direct conflict.