Iran defends peace demands after Trump rejects U.S. proposal

Iran is hardening its price for peace, and Washington is rejecting it just as firmly. Tehran’s latest response to a U.S. proposal, sent through mediator Pakistan, called for war reparations, recognition of Iranian sovereignty over the Strait of Hormuz, an end to sanctions, and the release of frozen Iranian assets and overseas funds.

Donald Trump dismissed the reply on Sunday, May 10, 2026, as “totally unacceptable,” signaling that the gap between the two sides is not cosmetic. The first phase of talks had centered on ending hostilities and securing maritime traffic in the Gulf and the Strait of Hormuz, but Iran’s demands moved well beyond a pause in fighting and into questions of compensation, control, and economic relief.

That is what makes the latest exchange more than routine bargaining. Iran’s state media and officials have framed the demands as legitimate safeguards for regional security, not concessions to be traded away. Some Iranian coverage said Tehran would “never bow,” while senior figures described the package as generous in the face of a 10-week conflict that has already damaged parts of Iran and Lebanon and rattled global energy markets.

The most sensitive issue is the Strait of Hormuz itself. Tehran’s insistence on full sovereignty over the waterway goes to the heart of the dispute, because the United States has been pressing for the strait to reopen and for shipping to resume safely. The sanctions and frozen-assets demands are equally central. They suggest Iran is not treating economic relief as a side benefit of peace, but as a prerequisite for any wider settlement.

Trump’s rejection also carried immediate economic weight. Oil prices rose on Monday, May 11, 2026, with Brent crude climbing to around $104 a barrel as traders weighed the risk that the 10-week-old conflict could drag on and keep shipping through the strait paralyzed. The pressure has extended beyond the Gulf: the talks have also touched Lebanon, where Iran-backed Hezbollah has been fighting Israel, underscoring how many fronts the proposal tries to close at once.

The United States has also been pressing China to help persuade Tehran to reopen the strait, although Beijing’s role remains uncertain. For now, the public statements from both sides have narrowed the path to diplomacy. Washington appears unwilling to pay for de-escalation with concessions on sanctions or assets, while Iran is signaling that those issues, along with sovereignty and compensation, are the terms on which any real deal must begin.