Iran Responds to U.S. Peace Proposal as Fighting and Oil Disruptions Continue in Persian Gulf

By Emmanuel Bobby

Iran has formally responded to a United States proposal aimed at ending the escalating conflict in the Middle East, according to reports from Iranian state media on Sunday, signaling that diplomatic efforts are continuing despite ongoing military confrontations in the Persian Gulf.

Iran’s state news agency IRNA reported that Tehran’s response was delivered “through mediator Pakistan,” though officials did not publicly disclose the exact contents of the message or whether Iran accepted any portion of the U.S. proposal.

“According to the proposed plan, negotiations at this stage will focus on the issue of ending the war in the region,” IRNA reported.

The development comes as U.S. and Iranian forces continue exchanging fire in and around the Persian Gulf, more than a month after a temporary ceasefire arrangement was announced in an attempt to stabilize the region and reopen the strategically vital Strait of Hormuz.

Despite that ceasefire effort, Iran has continued restricting maritime traffic through the narrow waterway, effectively blocking many vessels from passing through the strait and disrupting a major portion of the world’s oil supply chain. Before the conflict intensified earlier this year, roughly 20% of global oil shipments moved through the Strait of Hormuz each day, making the standoff one of the most economically significant crises in recent years.

The prolonged disruption has fueled global uncertainty, shaken energy markets, and raised fears of broader economic fallout. However, markets have shown signs of optimism in recent days amid growing expectations that a diplomatic breakthrough may be approaching after weeks of negotiations, military pressure, and intermittent clashes.

Oil prices have fallen sharply over the past week while global stock markets have climbed, reflecting investor hopes that Washington and Tehran may eventually reach an agreement capable of restoring stability to Gulf shipping lanes.

Speaking Sunday, U.S. Energy Secretary Chris Wright said Washington was still waiting for what he described as a “clear resolution” from Iran regarding the latest American proposal.

During an appearance on “Meet the Press,” Wright said the United States remained focused on two key demands: restoring unrestricted shipping through the Strait of Hormuz and permanently ending Iran’s nuclear ambitions.

“We’re seeking the free flow of traffic through the international waters that are the Straits of Hormuz, and an end to the Iranian nuclear program,” Wright said.

He added that restoring commercial access to the waterway would likely ease pressure on global energy markets and reduce fuel prices worldwide.

“When we start to get free flow of traffic through the Strait of Hormuz, energy prices will come down,” he said.

Meanwhile, Mike Waltz acknowledged that diplomatic efforts have moved slower than many officials had hoped but insisted negotiations remain active.

“The negotiations and that diplomacy is ongoing,” Waltz said during an interview with ABC News, adding that the process had gone “longer and slower, I think, than anyone would like.”

At the same time, military tensions remain high across the region.

President Donald Trump recently paused a controversial naval operation known as “Project Freedom,” a plan designed to use U.S. military vessels to escort commercial shipping through the Strait of Hormuz. The mission was suspended only days after being announced, reflecting concerns over the possibility of a broader regional escalation.

Even though the escort initiative has been paused, the United States has continued enforcing its own naval blockade against Iranian ports in an effort to weaken Tehran economically and pressure its leadership into making concessions at the negotiating table.

However, intelligence assessments reviewed by Western officials suggest Iran may be capable of enduring the blockade far longer than initially expected. According to analysts and officials familiar with the assessments, Tehran could likely survive months of restricted exports without suffering catastrophic economic collapse or irreversible damage to its oil infrastructure.

In a phone interview Friday, Trump dismissed suggestions that the conflict was nearing a final conclusion.

“It’s over when it’s over,” Trump said when asked whether the war with Iran had ended.

“But we certainly have won militarily,” the president added. “We have to get people to come out of the caves [in Iran] and sign something.”

Trump also claimed the United States now effectively controls the strategic shipping route through the Strait of Hormuz.

“We really control it; they don’t,” he said. “And we’ve taken the business away from them.”

“There are no boats going into Iran,” Trump added. “They’re dying.”

Despite the aggressive rhetoric, Trump indicated he remains focused on securing what he considers a favorable diplomatic agreement rather than rushing toward a quick settlement.

“I don’t want to get there if it means I can’t make the best deal,” he said. “I’ve got to make good deals. We’re pretty close.”

Iranian officials, however, continue accusing Washington of undermining diplomatic efforts through military pressure.

Iranian Foreign Minister Abbas Araghchi argued Friday that the United States repeatedly turns to military action whenever diplomacy appears possible.

“Every time a diplomatic solution is on the table, the U.S. opts for a reckless military adventure,” Araghchi said.

Energy analysts say the ongoing U.S. blockade is already beginning to strain Iran’s oil industry. Tehran has reportedly reduced production levels gradually as export routes remain restricted and storage facilities begin filling up.

Officials and industry experts estimate that within the next two months, Iran could face severe storage shortages that might eventually force temporary shutdowns at some oil wells. Still, most analysts believe the country can avoid large-scale production collapses because significant portions of its oil output can still be consumed domestically.

That internal consumption could allow Iran to continue operating most of its oil fields while weathering the blockade for an extended period, even as export revenues decline sharply.

The outcome of the negotiations now carries enormous geopolitical and economic consequences, with global markets, Gulf nations, and international energy consumers closely watching whether the United States and Iran can reach an agreement before the crisis escalates further.