US Sends Iran 7-Day Hormuz Ultimatum as Oil Prices Slip

The United States has sent a direct letter to Iran proposing a deal to pull the two countries back from the brink of a new war, with the Strait of Hormuz at the center of the bargain. Oil futures fell on the news that Washington is seeking talks, though fears of renewed military conflict kept the losses small [274471].

The letter came from US Vice-President JD Vance and was delivered to Mohsen Rezaei, secretary of Iran's Supreme National Security Council, on Sunday, following mediation led mainly by Qatar [274321]. Under the proposal, Tehran must first agree to commitments on its nuclear programme; if it does, the Strait of Hormuz would reopen within seven days, and in return the US would ease sanctions [274321]. Hopes of avoiding a major new war may now rest on Iran's reply, and the timing matters — the letter arrived soon after Tuesday's midterm elections in the US [274321].

Separately, Gulf states are working on a multipart peace deal to prevent what they see as a disastrous new war between Iran and the US [273029]. Their plan centers on reopening the Strait of Hormuz within four days of sanctions being lifted on Iran, and it also calls for the Houthis to withdraw substantial forces inside Yemen [273029]. The US knows about the talks but is waiting for a concession, and European powers suggest this could involve Iran allowing United Nations (UN) weapons inspectors back into the country [273029].