Iran said Sunday that an agreement with Oman defining new shipping lanes through the Strait of Hormuz is in its "final stages," but insisted the strategic waterway will not reopen until the United States meets a list of far-reaching conditions — including war compensation, the lifting of sanctions, an end to the naval blockade, and the withdrawal of American forces from the region.

Foreign Minister Abbas Araghchi told reporters that the pact with Oman would set out the routes vessels use once the US fulfills Tehran's conditions and the strait reopens. "This, however, does not mean that the Strait of Hormuz will reopen," he said, adding that the required steps "have been conveyed through intermediaries." He said an exchange of messages with Washington continues but does not constitute negotiations, which cannot resume until the US ends what Tehran calls violations of the interim deal signed in June.

Iran's Supreme National Security Council laid out the fuller list Saturday, declaring the strait will stay closed until the US "corrects its behavior." The demands include a permanent end to the war with Iran and its armed allies, a pledge never to threaten Iran again, removal of the naval blockade of Iranian ports, a lifting of sanctions, the unconditional release of frozen assets, and full compensation for war damage. The council's secretary, Mohammad Baqer Zolqadr, also listed a halt to what Tehran describes as aggression toward its Lebanese, Palestinian, Yemeni, and Iraqi allies.

President Donald Trump responded with studied detachment. "We are only semi-negotiating with them," he told Axios, saying the US was "low-keying it" with Iran. "We are just watching Iran with its huge inflation and the fact they have no money."

The Shape of the Oman Arrangement

The deal under discussion would formalize a two-lane system through the waterway that carried roughly 20% of the world's traded oil and gas before Iran blocked it in response to the US-Israeli attacks that began February 28. Inbound traffic would pass through a northern lane in Iranian territorial waters, while outbound traffic would use a southern lane in Omani waters coordinated with Tehran. The two countries have agreed on the coordinates of the routes, and ships would transit without fees or tolls during an interim period reported to run 60 days with the possibility of extension.

People familiar with the talks say the arrangement is endorsed by Gulf Cooperation Council members and is expected to be announced jointly by Iran, Oman, the US, and the UN's International Maritime Organization — though terms could still change. Iran's parliament approved the "general outlines" of the plan, but a lawmaker said vessels belonging to "hostile countries" would be barred until they compensate Iran for damage. Any final agreement also requires approval from Supreme Leader Mojtaba Khamenei, which officials indicated has not yet been secured.

A US official said Washington's actions would be tied to Iran's implementation of its commitments: "Once the deal is announced to restore commercial shipping without impediments, the United States will lift the blockade of Iranian ports." The delicate sequencing points to an arrangement that would effectively give Tehran a say over vessel traffic entering the Gulf — an outcome shippers have called difficult to work with and one that would mark a break from the strait's prewar status as an open international waterway. The Revolutionary Guard has framed the point bluntly, with spokesman Hossein Mohebbi saying the strait's reopening "has its own specific mechanism and has nothing to do with the negotiations between Iran and Oman," and that the US will have no choice but to accept Iran's conditions.

Attacks Continue Despite the Diplomacy

The talks are proceeding against continued violence on the water. The United Arab Emirates said a tanker belonging to the Abu Dhabi National Oil Company was struck by a missile while crossing the strait Saturday, with no casualties. The UAE's Foreign Ministry called the targeting of commercial shipping and the use of the strait "as a tool of economic coercion or blackmail" acts of piracy by the Revolutionary Guard and "a direct threat to the stability of the region." ADNOC said 15 vessels from its fleet have been attacked during the conflict, killing one crew member and injuring 20.

Some ships now transit under a limited US military convoy system, while others navigate with transponders switched off to avoid detection. Traffic through both Hormuz and the Bab al-Mandeb Strait fell to a handful of vessels midweek before partially rebounding, still far below prewar levels.

On the far side of the Arabian Peninsula, Iran's Houthi allies in Yemen struck the Saudi Aramco refinery at Jazan with drones Sunday — a facility that processes 400,000 barrels of crude per day — two days after Saudi Arabia signed a joint defense pact with Turkey and Pakistan in Mecca. The Saudi Energy Ministry said a fire was extinguished with no casualties. The Houthis also attacked the Yemeni government-held Red Sea port of Mocha twice in less than 24 hours; the Yemeni military said seven people were killed and 30 wounded, with air defenses downing 11 drones. The fighting threatens to unravel a 2022 truce and reignite Yemen's civil war.

Tehran's Bet and Its Risks

Iran's leadership is wagering that time favors Tehran. Its officials know US stockpiles of key munitions have thinned — the Center for Strategic and International Studies estimates Patriot interceptor inventories have fallen at least 65%, from 2,330 to fewer than 830, with THAAD interceptors down at least 38% — and that the war remains deeply unpopular with Americans ahead of November's midterm elections. The Pentagon has pressed defense companies to accelerate production, with Deputy Defense Secretary Kathleen Hicks writing that "we must dramatically accelerate our program schedules and expand our production capacity now." Trump's proposed $1.5 trillion defense budget remains stalled, with Congress in recess after Senate Democrats blocked a defense authorization bill in July.

"More than revenue from the strait, Iran wants to confirm its management and sovereignty over the strait," said Abdolreza Davari, an analyst who once advised former President Mahmoud Ahmadinejad. Mahdi Mohammadi, an adviser to Iran's chief negotiator, put it more starkly: "Iran is going after the enemy's defeat — not an agreement."

But the strategy carries costs at home. US and Israeli strikes have battered Iran's industrial base, the blockade has choked oil exports, and Iranians face triple-digit food inflation. A currency crisis in December sparked some of the largest protests in the Islamic Republic's history, followed by a crackdown in which thousands were reported killed. Mohammad Javad Zarif, the former foreign minister who negotiated the 2015 nuclear deal, warned in a recent essay that without a deal soon, "economic recovery will be difficult, and the possibility of internal unrest or renewed aggression, especially after the U.S. elections, cannot be ruled out."

Markets are watching the diplomacy closely. Brent crude climbed more than 5% over three sessions to top $84 a barrel before settling near $83, while Iran's rial strengthened from record lows and the Tehran Stock Exchange rose more than 2% on the first day of its trading week. For now, the waterway named for a Zoroastrian deity remains what Iran's joint military command has called an "unbreakable red line" — and the question of who controls it stands between the region and the end of a war now in its sixth month.