Oil prices jumped nearly 5% as the United States and Iran traded compensation demands over reopening the Strait of Hormuz, with Brent crude settling at $87.72 a barrel and U.S. West Texas Intermediate closing at $82.13, both up more than 4.9% on the day.
The spike came after President Trump said Iran must pay compensation for \u201call of the people that they have killed and gravely wounded\u201d before the U.S. would agree to terms reopening the strait, a critical shipping chokepoint for global oil exports. Iran, in turn, said the U.S. would need to lift sanctions on Tehran and meet other conditions of its own. Both sides hardening their positions at the same time pushed prospects for a near-term deal further out, which is what drove the price move: traders read a stalled Hormuz reopening as a longer stretch of constrained oil-supply risk.
Washington's Options Are Narrowing
Trump told Axios the U.S. is \u201conly semi-negotiating\u201d with Iran at this stage, and indicated he would lean on the existing U.S. naval blockade to pressure Tehran rather than launch another round of airstrikes. That posture, pressure without immediate escalation, reflects a US negotiating position with less room to maneuver than it had earlier in the year: according to Energy Information Administration data, the US Strategic Petroleum Reserve fell below 300 million barrels for the first time since January 1983, down roughly 116 million barrels since mid-March after Trump ordered the release of 172 million barrels following Iran's earlier move to choke off Hormuz exports. With the reserve that depleted, Washington has less of its own supply cushion to draw on if it wanted to offset a prolonged Hormuz disruption by releasing more oil domestically.
Separately, Pakistan's government said the US and Iran were close to reaching an arrangement, a claim that, if accurate, would sit awkwardly next to the hardening public positions both sides took over compensation the same day. Neither government has confirmed Pakistan's characterization.
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For now, the compensation dispute functions as the immediate sticking point in a negotiation that has dragged on for months, and the depleted state of the US reserve raises the stakes of how much longer it drags on: a further price shock would land on a strategic reserve with less capacity to absorb it than at any point in over four decades.
