US President Donald Trump has issued a stern warning to Iran, stating the country will be "hit very hard" if the Strait of Hormuz does not reopen soon. His remarks come as oil prices dropped to a three-week low amid optimistic talks about resuming shipments through the vital waterway.

Speaking to Fox News during a visit to California, Trump expressed confidence that the strait would open "very soon," following updates from Secretary of State Marco Rubio and Treasury Secretary Scott Bessent about progress in negotiations.

Progress in Negotiations

  • Marco Rubio confirmed ongoing discussions with Iran and Oman aimed at allowing commercial vessels to transit the strait again, though no final agreement has yet been reached.
  • Bessent suggested a deal could be finalized within days, potentially by Tuesday or Wednesday, to restore freedom of movement without imposing transit fees on ships.
  • While US officials highlight progress, Iran maintains it is not directly negotiating with the US but is engaged in talks with Oman, which acts as a mediator.

Strategic Importance and Market Impact

The Strait of Hormuz is a critical chokepoint, handling about one-fifth of global daily oil and liquefied natural gas supplies before the conflict escalated in February. Since then, Iran has restricted most traffic, while the US has implemented a naval blockade on Iranian ports.

Oil benchmarks responded to the news, with Brent crude falling nearly 5% below $80 a barrel and West Texas Intermediate dropping to $76, their lowest levels since mid-July.

The ongoing conflict and supply disruptions have contributed to volatile fuel prices worldwide, impacting consumers in the US, UK, and beyond.

Regional Security Concerns

  • The US Central Command confirmed the southern route through the Strait remains open for commercial vessels.
  • However, alternative routes like Saudi ports in the Red Sea have become increasingly hazardous due to attacks, including the recent sinking of an Indian-flagged vessel near Yemen.
  • Experts warn that threats to oil shipments in the Middle East are at their highest since the conflict began.

Despite high profits reported by major oil companies amid fluctuating prices, analysts note that the industry remains vulnerable to geopolitical developments and US policy moves.

Trump also indicated he had called off planned "massive" strikes on Iran to allow talks to proceed, emphasizing that this could be Iran's "last chance" to reach an agreement.