Countries were bracing on Monday for prolonged economic woes stemming from high energy prices after President Trump called the latest Iranian offer to end the war and reopen the Strait of Hormuz “garbage” and declared that the cease-fire was “on massive life support.”
Mr. Trump, speaking to reporters in the Oval Office, reiterated that Iran could not be allowed to develop a nuclear weapon and likened the truce announced last month to a patient with a “1 percent chance” of survival.
Iran’s state-owned broadcaster reported on Monday that in its latest counterproposal delivered via Pakistani mediators, Iran had demanded that the United States pay war reparations, recognize Iranian sovereignty over the Strait of Hormuz and end the sanctions placed on the government in Tehran.
A spokesman for Iran’s foreign ministry, Esmail Baghaei, told reporters that Iran had not demanded any “concessions” and had instead asserted the country’s “legitimate rights.”
He said Iran’s counterproposal would have ensured the safe passage of commercial ships through the strait, which Tehran effectively closed after the United States and Israel started bombing Iran in late February. The vital sea channel is normally a conduit for one-fifth of the world’s crude oil and a significant share of its natural gas and fertilizer.
Mr. Baghaei sidestepped questions about the fate of Iran’s nuclear program, saying that Iranian officials would “discuss that when the time comes.”
On Sunday, Mr. Trump dismissed the Iranian counterproposal as “TOTALLY UNACCEPTABLE” in a post on social media, without specifying what he found objectionable. On Monday, he criticized it again as a “piece of garbage” and said Iran was led by “lunatics” and “stupid people.”
Hours later, the speaker of the Iranian Parliament, Mohammad Bagher Ghalibaf, said that the country was “prepared for all options.”
“Our armed forces are ready to deliver a lesson-teaching response to any act of aggression,” Mr. Ghalibaf wrote on social media, adding that Iran’s adversaries “will be surprised.”
The comments showed how far apart the United States and Iran remain after weeks of sporadic negotiations aimed at a deal to reopen the strait and turn their tenuous cease-fire into a lasting peace agreement.
With both sides at odds, world leaders are confronting the prospect of a long-term energy crisis, with potentially grave economic consequences.
India on Sunday became the latest country to call for sacrifices, with Prime Minister Narendra Modi asking his country’s 1.4 billion residents to conserve fuel and fertilizer, two essential goods usually shipped through the Strait of Hormuz. He also told them to cut back on foreign travel.
The war and its economic fallout are also hovering over a summit taking place this week in Beijing between Mr. Trump and Xi Jinping, the leader of China, the biggest consumer of Iranian oil. Mr. Trump had hoped to have the conflict resolved by the time he headed to China to meet with Mr. Xi, who is eager to see an end to the fighting.
But the talks between Iran and the United States have hit several major obstacles.
Analysts said the Trump administration likely viewed the Iranian demands for war reparations and recognition of its control of the Strait of Hormuz as non-starters.
Removing sanctions would be possible, analysts said, only if Iran agreed to abandon its nuclear program.
That Iran is insisting on those terms suggests its leaders believe they have the upper hand, said Danny Citrinowicz, an Iran researcher at the Institute for National Security Studies in Tel Aviv and a former senior Israeli military intelligence officer.
“One thing is clear: The Iranian regime’s reply reflects the mind-set of a leadership that believes it survived the war and won, not that it lost it,” Mr. Citrinowicz wrote on social media. “As a result, its demands remain high and its willingness to compromise is extremely limited.”
Mr. Trump had initially conditioned the cease-fire on the free movement of ships in the strait. But Iran has insisted that any ships that traverse the Persian Gulf waterway do so in coordination with its forces. And Mr. Trump has repeatedly pulled back from his threats to bomb Iran as punishment for blocking marine traffic there.
Last week, Mr. Trump announced a U.S. military effort to free ships trapped in the maritime bottleneck. The next day, he abandoned the effort, saying that there had been “progress” toward a peace agreement with Tehran, although no evidence of a breakthrough has emerged.
Since then, attacks have continued in and around the strait, straining the cease-fire. On Sunday, the United Arab Emirates said it had again been targeted by Iranian drones. And last week, American warships fired on military facilities along Iran’s coast in response to Iranian attacks on American naval vessels.
Iranian officials are facing domestic pressure to reach a deal. Before the war, U.S.-led sanctions had squeezed Iran’s currency, igniting demonstrations that quickly spiraled into a mass movement calling for the ouster of the Islamic republic. Iranian security forces violently quelled the protests, killing thousands, rights groups said.
Before the war, Iran’s currency had been squeezed partly because of U.S.-led sanctions. Since the war began, the country’s economic problems have grown only more grim as U.S. and Israeli forces have attacked Iranian industries, the U.S. Navy has blockaded Iranian ports, and Tehran has imposed an internet blackout on its own citizens.
An Iranian official, Gholamhossein Mohammadi, estimated that the war had caused the loss of one million jobs “and the direct and indirect unemployment of two million people,” the Iranian news outlet Tasnim reported.
Amid concerns over the economic fallout from the war, the average price of gasoline in the United States has climbed to more than $4.55 per gallon, up more than $1.50 since the war began.
As a result, Mr. Trump mused on Monday about suspending the federal gas tax, 18.4 cents per gallon, which would require congressional approval. It’s not clear how much support the idea has in Congress.
“It’s a small percentage, but it’s, you know, it’s still money,” Mr. Trump said.
In 2022, President Joseph R. Biden Jr. proposed suspending the gas tax for three months to give Americans “just a little bit of breathing room.” But it never happened. Democrats balked, and Republicans slammed the idea as gimmicky and bad policy.
Reporting was contributed by Shawn McCreesh, Alex Travelli, Emmett Lindner, Shirin Hakim and Leo Sands.
Aaron Boxerman is a Times reporter covering Israel and Gaza. He is based in Jerusalem.
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