Trump Rejects Peace Proposal – But U.S. – Iran Diplomacy Persists Amid Escalating Costs

Trump Rejects Peace Proposal – But U.S. – Iran Diplomacy Persists Amid Escalating Costs

By Paul V. Young – TheNationWeek.com | September 28, 2026

CAIRO, Egypt — Even as President Donald Trump publicly dismissed Iran’s peace proposal, quiet, urgent negotiations continue to de-escalate the eight-month conflict and restore passage through the Strait of Hormuz — the global energy lifeline whose closure has sent shockwaves through economies worldwide. Multiple regional and U.S. officials, speaking on condition of anonymity, confirm that indirect talks are set to resume Monday, despite the president’s public rejection.

The Proposal: Strait Opening For Sanctions Relief

Tehran’s offer is straightforward: reopen the Strait of Hormuz within seven days in exchange for three key steps — lifting the U.S. naval blockade, unfreezing Iranian assets, and waiving sanctions on Iranian oil sales.

Negotiators are advancing a framework that would first restore shipping access, then roll back sanctions. The draft ties the Strait’s reopening to a parallel traffic-management agreement with Oman, aiming to return the waterway to its status as an open international passage.

Officials caution that Trump’s public dismissal may itself be a negotiating posture — the U.S. has issued no formal rejection. Privately, a senior administration official confirmed that Trump remains open to a non-military resolution, though he voiced skepticism that Iran will meet U.S. terms. Washington is pressing for concessions on Iran’s nuclear program, including unfettered access for international inspectors. A June memorandum that envisioned a 60-day review period collapsed within days.

Mediators report “positive signals” and “modest progress” over the weekend, with Qatar leading the diplomatic push. Iranian Foreign Minister Abbas Araghchi remains in New York following the UN General Assembly, awaiting “definitive word” from intermediaries.

Economic Pain Deepens On Both Sides

Neither nation is insulated from the toll. Brent crude now tops $108 per barrel. U.S. consumers face rising fuel costs; Iran’s oil exports have been decimated by blockade and sanctions. Araghchi noted that Trump stands to gain politically before midterm elections should a deal be reached — the seven-day timeline would begin the moment Washington accepts.

Tensions Widen, Warning Harden

Impatience is mounting in Tehran. A rare statement attributed to Supreme Leader Ayatollah Mojtaba Khamenei warned: “We have struck painful blows at enemy forces near the Strait — and before long, the Arabian Sea will be rid of them.”

The conflict is spreading. Iran-backed Houthi forces have positioned themselves at the Bab el-Mandeb Strait, a critical chokepoint linking the Red Sea and Gulf of Aden, further disrupting trade. While Tehran maintains that the Houthi-Saudi conflict is separate, it has offered to assist in brokering a settlement. Tehran’s proposal also seeks a broader cessation of hostilities, including in Lebanon.