President Donald Trump said the United States is now demanding compensation from Iran, escalating a standoff over the Strait of Hormuz just as he declared the strait "open now" under what he called full US Navy control. Trump separately said Iran will "never get a nuclear weapon" and that any compensation Iran owes could start with payments for people the country has killed over the past 50 years.
Crude oil moved sharply on the news. West Texas Intermediate futures climbed roughly 5% to around $82 a barrel, while Brent crude rose a similar amount to near $87.72, as traders weighed the odds that the two sides fail to finalize a deal governing traffic through the strait — a chokepoint that carries an estimated 20% of the world's seaborne oil. Iran's own draft proposal reportedly went the other direction, floating a plan to bar US and Israeli vessels from the strait entirely while requiring other nations it considers hostile to pay compensation before transiting.
A US reserve with less room to absorb a shock
The timing is notable because Washington's own buffer against a supply disruption is thinner than it has been in decades. Department of Energy data shows the Strategic Petroleum Reserve had roughly 304.8 million barrels in storage as of late July, after the reserve was drawn down by about 107.7 million barrels following an earlier Strait of Hormuz closure in February — part of a 172 million-barrel release coordinated with the International Energy Agency. That leaves inventories below 300 million barrels for the first time since 1983, a more-than-40-year low, at precisely the moment a fresh disruption risk is back on the table.
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Iran signals no rush to settle
Adding to the uncertainty, a senior Iranian official reportedly told counterparts that Tehran has no real intention of reaching a deal with the Trump administration, and instead plans to drag out negotiations until the end of Trump's term without making concessions. For markets, that combination — a stretched US strategic reserve, an unresolved dispute over a chokepoint carrying a fifth of global oil flows, and an Iranian negotiating posture built around delay — is what's kept crude bid even as headlines swing between de-escalation and confrontation day to day.
