Iran Offers Hormuz Reopening in Exchange for US Concessions

The Strait of Hormuz, a critical waterway for global oil supplies, may be reopened within seven days if the United States takes initial steps to reduce military pressure on Iran. According to a report from Kyodo News, citing a senior Iranian government official, Tehran has proposed a plan to restore traffic through the strait in exchange for Washington's easing of military pressure and lifting of the blockade on Iranian ports.

The development sent oil prices plummeting, with Brent crude falling from around $102 to below $99 a barrel. Diesel prices also declined by about 3%.

Saudi Arabia is restarting its East-West pipeline, which will allow exports from Yanbu to resume and provide an alternative route that bypasses the Strait of Hormuz. The pipeline was initially shut down following recent drone attacks, but it has now been restarted at low throughput.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted that Washington faces competing incentives in responding to Iran's proposal. On one hand, US President Donald Trump may face domestic pressure to de-escalate the conflict, with a recent poll showing his approval rating at 32%. Two Republican Senate candidates have also publicly called for an end to the war.

On the other hand, Washington may see less reason to compromise if it believes its strategy is beginning to work. Oil flows through Hormuz have increased despite the blockade of Iranian exports, while Saudi Arabia's restoration of the East-West pipeline reduces the urgency of a compromise.