President Donald Trump declared Monday that the United States Navy maintains complete control of the Strait of Hormuz and demanded Iran pay reparations for what he called a half-century of damages, dramatically raising the stakes in ongoing negotiations over the critical waterway. Trump instructed his representatives to make compensation demands a non-negotiable element of any future talks with Tehran.
The president's comments came as Pakistan's defense minister suggested the U.S. and Iran were "close to some sort of arrangement" over the strait, which handled roughly 20% of global oil supplies before the conflict. "If there's damages to be paid, I think Iran should pay those damages," Trump told reporters in the Oval Office. He refused to elaborate on next steps. "You'll find out," he said.
Economic Pressure Campaign
The Trump administration has since April 16 been conducting what it calls "Operation Economic Fury" against Iran. Treasury Secretary Scott Bessent described the effort as the "financial equivalent" of a bombing campaign, with sanctions threatening any country that buys Iranian oil or maintains banking relationships with Tehran. Average loadings of Iranian oil have plummeted from 1.8 million barrels per day before the war to less than 500,000 barrels per day over the past month, according to the U.S. Treasury Department.
Trump characterized Iran's economy as devastated. "Iran is broke, totally broke," he said. "They have no money. They're not paying their soldiers. They have inflation of 300%." While inflation is running high in Iran, the International Monetary Fund estimated the overall economy shrinks by 5.4% and the Iranian government recently reported an annual inflation rate of 88.6%—lower than Trump's figure but still indicating severe economic distress.
The administration views the naval blockade and sanctions as effective tools that can be intensified further. A senior U.S. official said the military has set back Iran's ability to produce, sell and ship oil and energy resources, and Trump has additional options available in the weeks and months ahead. Defense Secretary Pete Hegseth said Monday, "It's not just what the military can do — we've got the most powerful economy in the world as well."
Iran's Counter-Demands
Iran's Supreme National Security Council secretary, Mohammad Bagher Zolghadr, said Saturday the strait won't reopen until Washington lifts its naval blockade and sanctions, withdraws American forces from the region, pays war reparations, and releases frozen Iranian assets. The council also demanded an end to U.S. attacks on Iran's regional allies. Iran's Foreign Ministry spokesman, Esmail Baghaei, responded to Bessent's characterization of sanctions as "suffocating" Iran by calling U.S. reliance on economic penalties a "compulsive addiction" rather than coherent policy.
Crude oil prices climbed Monday as investors interpreted Trump's comments as signaling fewer ships would traverse the strait, limiting global supplies of gasoline, jet fuel, natural gas and other energy forms. The U.S. economy has continued to grow, but inflation is elevated and borrowing costs have risen in ways that have hurt Trump's popularity and led to disapproval of the Iran war.
Strategic Questions
Richard Nephew, a senior research scholar at Columbia University who helped direct Iran sanctions strategy in the Obama administration, questioned the administration's approach. He said Trump hasn't articulated clear strategic goals for the war, at times stressing Iran can't have a nuclear weapon, then emphasizing the strait, then discussing ballistic missiles. "Economic pressure is a possible element in his strategy, but he's yet to explain the purpose," Nephew said. He added that Trump has "systematically weakened his own hand through his inadequate use of force, inarticulate elucidation of an objective, and vacillation on negotiations."
Juan Zarate, a deputy national security adviser in the George W. Bush administration, said the sanctions and naval blockade give the U.S. economic and financial leverage. Sanctions threatening third-party countries doing business with Iran also have impact, though they take time. "The ultimate question will be how far the United States is willing to go to constrict Iran's oil trade and threaten third countries with severe sanctions — and whether it has the patience to test whether the economic pain will change the regime's behavior," Zarate said.
Trump has long criticized past presidents who relied on sanctions to limit Iran's economic ability to fund its military and nuclear development. In a speech last week in Las Vegas, he defended the bombing, missiles and drone attacks that began on Feb. 28 by saying sanctions from previous administrations dating back to November 1979 had failed. "It's been 47 years, but really, it's been 50 years because they've been saying 47 for three years, it's been 50 years," he said. "And no other president has done what you should have done a long time ago, because Iran cannot have a nuclear weapon, can't have it."
Pakistan's defense minister, Khawaja Asif, told reporters that "things are shaping up again in favor of a peace arrangement or a deal." He said signals in the last two to three days suggest proximity to some sort of arrangement, without providing details. A Qatari Foreign Ministry spokesperson told Al Jazeera that talks between Iran and Oman about opening a shipping channel through the Strait of Hormuz were at a "critical juncture."
U.S. forces early Tuesday morning fired on a Panama-flagged vessel that tried to bypass the blockade, CNBC reported, citing The Wall Street Journal. The U.K. Maritime Trade Operations Centre said Tuesday morning it received a report of an incident involving a tanker and military forces in the Gulf of Oman, near the Strait of Hormuz. It advised vessels to consider the latest maritime security information and maintain awareness of the evolving operational environment.
Why This Matters:
The Trump administration's dual-track approach of naval blockade and economic sanctions represents a test of whether financial pressure can succeed where 46 years of sanctions failed. The strait's closure has disrupted 20% of global oil supplies, driving up energy costs that contribute to domestic inflation and threaten Trump's political standing. Iran's collapsing oil exports—down nearly 75% from pre-war levels—demonstrate the blockade's effectiveness, but Tehran shows no signs of capitulating to U.S. demands. The administration's willingness to threaten third-country sanctions raises questions about how far it will push allies and trading partners to isolate Iran. With talks at a critical juncture, the economic leverage created by sanctions and the blockade could force Tehran to negotiate seriously—or prolong a conflict that's already straining the global economy and American patience.