Iran Wants A Diplomatic Exit. Why Does Trump Keep Raising The Stakes?

Iran is still pushing for a negotiated way out of its war with the United States and Israel, even after US President Donald Trump rejected Tehran’s latest proposal to reopen the Strait of Hormuz and resume negotiations. Iran submitted a seven-day roadmap through Qatari mediators, offering to reopen the strategic waterway and restart talks with Washington if the US lifted its naval blockade of Iranian ports, eased sanctions and released frozen Iranian assets.

Trump said on Saturday that he had rejected the proposal, arguing that Iran wanted an agreement because it was “losing so badly”. But Tehran says it is still waiting for a formal US response through the mediators. Iranian Foreign Minister Abbas Araghchi said Iran had seen Trump’s initial reaction but had not received Washington’s definitive position. Trump, meanwhile, has said he expects further talks with Iran this week. The competing positions were reported by Reuters on Sunday.

The dispute is therefore not over whether there should be negotiations, but over who should make concessions first. Iran is keeping negotiations open while refusing to give up its conditions, while Washington is keeping the possibility of talks alive while maintaining military and economic pressure. At the same time, the war is creating costs for both countries, although the economic damage to Iran is far greater. The question is why Tehran continues to seek a diplomatic solution and why Trump is still relying on pressure to seek a deal.

Why Iran keeps returning to diplomacy

Iran’s proposal is not an unconditional offer to end the conflict. Under the seven-day roadmap, Washington would lift its naval blockade of Iranian ports, waive sanctions on Iranian oil sales, release an estimated $12 billion in frozen Iranian assets and observe a ceasefire covering the wider region, including Lebanon and Yemen. Iran would then reopen the Strait of Hormuz and begin negotiations with the US over a wider agreement, including its nuclear programme.

The proposal therefore uses Hormuz as a negotiating instrument. Iran retains the ability to disrupt shipping through the waterway and has used that leverage during the conflict, while US military operations have also affected access and sharply restricted Iran’s own oil exports. That makes the Strait both a source of leverage for Tehran and a central pressure point for Washington.

The latest proposal also resembles a memorandum of understanding reached in June, which provided for a temporary 60-day arrangement. That agreement broke down within weeks amid disagreements over its terms, including control of shipping through Hormuz, before the conflict escalated again. Al Jazeera reported that analysts viewed the new Iranian roadmap as an attempt to revive elements of that earlier framework.

That history helps explain why Iran can simultaneously distrust Washington and continue seeking talks. Tehran has repeatedly argued that previous negotiations were followed by military action and sanctions. But distrust does not remove the incentive to negotiate when the alternative is a prolonged conflict that is damaging Iran’s economy and restricting its oil trade.

For Tehran, diplomacy also offers a way to seek sanctions relief and an end to the blockade without accepting an agreement entirely on Washington’s terms. Its latest proposal attempts to exchange access to Hormuz for concrete economic and political concessions.

Why Washington is maintaining pressure

Trump’s rejection of the proposal does not mean the US has abandoned diplomacy. Instead, Washington and Tehran remain divided over the conditions under which negotiations should proceed.

The US has continued to use military pressure, sanctions and the naval blockade as leverage. Trump has argued that Tehran is seeking an agreement because of the pressure it is facing.

Al Jazeera, citing analysts, reported that Trump appears to believe Washington has more to gain by waiting and that economic sanctions can be used to extract further concessions from Iran. The same analysis warned that continuing to increase pressure could also cause Washington to lose leverage if Tehran becomes less willing or able to compromise.

Iran wants the easing of military and economic pressure to form part of the process leading to a settlement. Washington, meanwhile, has continued to apply that pressure while seeking concessions from Tehran.

The latest diplomatic confusion reinforces the problem. Trump has publicly rejected Iran’s proposal, but Araghchi says Tehran has not yet received a formal response through the mediators. Iran is therefore leaving open the possibility that Washington could clarify its position and return to negotiations even after Trump rejected the roadmap publicly.

Neither side appears ready to give up its main bargaining tool first.

The war is also creating costs for the US

The economic damage is not confined to Iran, although the scale is not comparable.

The disruption to energy supplies has pushed oil and refined-product prices higher and created a particular problem for diesel. Reuters reported on September 21 that US retail diesel prices had crossed $6 a gallon for the first time, while US diesel inventories had fallen to their lowest level for that time of year since records began in 1982. The report said the squeeze was being driven by the Iran and Ukraine wars, which had sharply reduced supplies from major producers.

The Iran conflict is therefore adding to an already tight global diesel market rather than being the sole cause of the US fuel-price problem.

That matters because diesel is closely tied to the movement of goods. Around 80% of US diesel consumption is used for transport, according to Reuters, meaning higher prices can raise costs for trucking, agriculture, manufacturing and retail.

The impact is already becoming a political issue. Reuters reported that US voters were increasingly concerned about the cost of living as higher petrol and diesel prices added to inflation pressure. The same poll found only 17% of respondents approved of Trump’s handling of the cost of living.

The more precise point is that the conflict is adding another cost to an economy already dealing with inflation and high borrowing costs. The longer the disruption continues, the more pressure businesses face to pass higher transport and fuel costs on to consumers.

Iran is carrying a much heavier direct economic burden. But the US is no longer insulated from the consequences of a conflict that Washington is using economic and military pressure to try to resolve.

Why diplomacy remains possible despite the distrust

Iran’s continued diplomatic push should not be mistaken for trust in Washington.

President Masoud Pezeshkian has said Tehran no longer trusts talks with the US because previous negotiations were followed by attacks and sanctions. Yet Iran has continued to put forward conditions for reopening Hormuz and resuming negotiations. Al Jazeera reported that Araghchi said Tehran would not back down from those conditions after Trump rejected the latest proposal.

That apparent contradiction is central to understanding Tehran’s position. Diplomacy does not require the two sides to trust each other. It requires them to believe that a negotiated settlement can produce a better outcome than continuing the conflict.

Iran has strong reasons to make that calculation. Its economy has been hit by sanctions, disrupted oil exports and the wider consequences of the war. But Tehran also has reasons to resist an agreement reached while it is under military pressure. Its proposal therefore attempts to preserve its bargaining position while creating a route towards an end to the fighting.

Washington faces a different calculation. Maintaining pressure can keep leverage on Tehran, but the strategy also carries economic costs. Oil prices rose again on Monday after Trump rejected Iran’s proposal, with Reuters reporting Brent crude at $105.64 a barrel as markets assessed the prospects for further talks and the risk of renewed fighting.

The costs are not equal. Iran is facing far greater direct economic damage, while the US is dealing mainly with higher energy and transport costs and the inflationary consequences of a prolonged oil shock.

But that distinction does not remove the pressure on Washington. Every further disruption to energy supplies can feed into fuel prices, freight costs and consumer prices.

For now, the two sides remain divided over what should come first. Iran wants the easing of pressure to be part of the route towards negotiations. Trump has rejected Tehran’s latest roadmap while keeping the possibility of further talks open.

Iran’s calculation is that diplomacy can end the economic damage without forcing it to surrender its remaining leverage. Trump’s calculation appears to be that continued pressure can produce better terms. But time can work against both sides: prolonged pressure is hurting Iran, while prolonged disruption is also pushing up energy and transport costs in the US.

The question, then, is not simply whether either side wants a deal. It is whether the costs of holding on to leverage will eventually become greater than the concessions either side hopes to extract from it.