Iran demands $10bn to reopen Strait of Hormuz

Iran has set new conditions before it will reopen the Strait of Hormuz, the narrow waterway through which about a fifth of the world’s oil passes each day. Foreign Minister Abbas Araghchi told Iranian media the Strait would stay closed until Iran receives compensation for damages it says it suffered during past conflicts and sanctions. Talks with Oman about reopening the strait are “approaching the final stages,” Araghchi said, but he added the reopening is “subject to other conditions.”

The demands mark a sharp escalation in Iran’s leverage over global energy markets. Hormuz has been partially or fully blocked three times since 2019, most recently in April 2023 after Israel struck an Iranian consulate in Syria. Iran’s Revolutionary Guards have repeatedly threatened to close the strait if Iran faces further military or economic pressure. The new compensation claim—widely seen as a demand for billions of dollars—reflects Tehran’s view that years of U.S. sanctions have cost the country more than $200 billion in lost oil revenue since 2018.

The standoff comes as Oman, a neutral Gulf state, has been quietly mediating between Iran and Western powers. Muscat has hosted several rounds of indirect talks aimed at easing tensions and securing the safe passage of ships. Western diplomats say Iran’s latest demands could derail any near-term deal, but they also note that Tehran has softened its stance in previous rounds after receiving limited sanctions relief.

If Iran refuses to reopen Hormuz without compensation, oil prices could spike quickly. The U.S. has pledged to keep the strait open and has sent extra naval patrols to deter Iranian threats. A prolonged closure would squeeze global supply, push gasoline prices higher in Europe and Asia, and test the limits of Western patience with Iran’s nuclear and regional policies.