US and Iran Negotiate Ceasefire Extension as Strait of Hormuz Remains Closed

On the 43rd day of the Strait of Hormuz closure, American and Iranian negotiators are racing to extend a two-week ceasefire that was supposed to end this week — and which has already survived its own collapse and revival. Mediators in Islamabad and Doha are trying to bridge gaps over uranium enrichment, sanctions relief, and the reopening of the world's most important oil chokepoint, while tanker traffic sits at effectively zero, Brent crude trades above $100, and an International Monetary Fund forecast released on 14 April warned that continued disruption could push the global economy toward recession [1][2][3].

The broad outlines of a deal are known. The sticking points are what always make or break agreements with Tehran: verification, enrichment, and political cover at home. Below is what is actually on the table, what the closure has cost so far, and what credibly happens if the talks fail again.

How we got to day 43

The current crisis traces to a coordinated US-Israeli air campaign on 28 February 2026 — codenamed Operation Epic Fury — that struck Iranian missile, nuclear and command sites [4][5]. On 2 March, American munitions hit the Shahid Ahmadi Roshan enrichment facility at Natanz, about 220 kilometres southeast of Tehran; the International Atomic Energy Agency subsequently reported damage to entrance buildings at the underground fuel enrichment plant but found no radiological leak and no reported damage to the main hall [6][5]. Within 48 hours, tanker traffic through Hormuz collapsed. Vortexa and Kpler trackers logged a 70% drop and more than 150 ships anchored outside the strait; by 4 March, transits were effectively zero [2][7]. On 27 March, the Islamic Revolutionary Guard Corps formally declared the strait closed to any vessel bound to or from American, Israeli, or allied ports [2].

Iran framed its missile strikes on Dimona — which wounded at least 180 people in southern Israel on 21 March — as a proportionate response to the Natanz attack, and state television repeatedly described the Hormuz closure as a defensive measure against further strikes on Iranian energy infrastructure [8]. Western governments describe both as coercion. The honest answer is that the closure is doing both jobs at once: it raises the cost of continued bombing for Washington and Tel Aviv, and it generates leverage Iran needs to justify concessions at the table.

A Pakistan-mediated ceasefire took effect on 7 April, calling for an immediate halt to hostilities, reopening of the strait, and a 15-to-20-day negotiating window [9]. Those talks broke down in Islamabad on 12 April. President Donald Trump announced a naval blockade of Iranian ports the next day and said publicly that he "no longer cared" about negotiations [1][10]. Within 72 hours, back-channel contacts resumed; on 15 April Bloomberg and Fortune reported the two sides were close to agreeing a two-week extension, with technical talks aimed at bridging the Hormuz and enrichment questions before the original truce expires around 21 April [1][3].

What each side is actually demanding

Washington's public position, set out by Vice President JD Vance after the Islamabad round, is that Tehran must make a "fundamental commitment" not to develop nuclear weapons [11]. The concrete US asks, as reported by Al Jazeera and the Congressional Research Service, include: zero uranium enrichment on Iranian soil, verifiable dismantlement of deeply buried enrichment infrastructure, hard caps on Iran's ballistic missile programme, an end to military support for regional armed groups, and the immediate reopening of Hormuz [9][11][12]. In exchange, Trump has publicly floated "tariff and sanctions relief" and the White House has signalled that meaningful relief would follow verified Iranian compliance [11].

Iran's counter-proposal, leaked in fragments through Iranian officials, reportedly includes acceptance of continued low-level enrichment, security guarantees against further strikes, and front-loaded sanctions relief — particularly on oil exports and the central bank [9][11]. Both sides agree, on paper, that the strait should reopen; they do not agree on the sequencing, and Tehran is using the closure as the largest piece of leverage it has ever brought to a negotiation with Washington.

The cost, measured in barrels and basis points

Source: FRED / EIA

Data as of Apr 13, 2026CSV

WTI crude has roughly doubled from its late-2025 low of $55.44 to $100.72 a barrel — up 62.5% year-over-year — on the back of the closure [13]. Brent crude surged past $120 a barrel on 8 March and peaked at $126, the highest in four years, before settling into a $100-$114 range after the April truce was signed [2][14]. Goldman Sachs analysts have told clients that another month of closure would keep Brent above $100 for the remainder of 2026 [14].

The energy-price story is worse in gas. Qatar is the source of 12%-14% of Europe's LNG imports, all of which transit Hormuz [15]. After Iranian drone strikes damaged the Ras Laffan industrial complex in early March, QatarEnergy took several liquefaction trains offline — removing roughly 17% of global LNG export capacity in a single week [16][17]. European benchmark TTF gas prices jumped 45% on the day of the Qatar announcement and the World Bank recorded a roughly 60% month-on-month surge in global natural gas prices for March [18][19]. Asian spot LNG traded at parity with European contracts for the first time in over two years.

Freight and insurance costs have risen almost as steeply. Marine war-risk premiums for voyages approaching the Persian Gulf jumped 15%-30% in the first three weeks of the crisis and have since stabilised at six-year highs that make transit uneconomic for most non-state operators [2]. UNCTAD estimates that the added insurance, rerouting and demurrage costs work out to roughly $2.5 million per shipment for vessels that do attempt the passage [20].

Who is bleeding and who is buffered

Source: IEA, EIA, industry reports

Data as of Apr 1, 2026CSV

The alternative pipelines that were meant to make Hormuz "optional" are simply not big enough. Saudi Arabia's East-West crude line from Abqaiq to Yanbu on the Red Sea has a design capacity of about 7 million barrels a day after recent expansions. The UAE's Habshan-Fujairah line (ADCOP) adds another 1.8 million barrels a day. The long-idled Kirkuk-Ceyhan line to the Mediterranean could notionally supply another 0.5 million [21][22][23]. Even pushed to their limits — and none is currently at capacity — the combined bypass absorbs roughly 9.3 million barrels a day against the 20 million barrels that typically move through Hormuz [22][23]. Engineering News-Record noted in March that the bypass grid "was sized for a short disruption" and that duplicating it would take years of new construction [24].

Asia and Europe are absorbing the pain very differently. Japan began releasing 80 million barrels from its strategic petroleum reserve — equivalent to roughly 15 days of domestic demand — on 16 March [25]. South Korea's energy minister Kim Sung-hwan told reporters the country has enough cover to operate for more than a year without supply shortfalls [25][26]. China has not announced a formal SPR release; Breakwave Advisors and other trade sources estimate Beijing holds roughly 1.2 billion barrels in commercial and strategic storage, giving it about 310 days of import cover excluding Iranian supply [25]. The acute European pressure sits in countries that swapped Russian pipeline gas for Qatari LNG after 2022 — Italy, Belgium, Poland and the Netherlands — where industrial users are again facing curtailment notices [15][19].

The food-security tail is what worries the UN. UNCTAD and the UN World Food Programme warn that roughly 20%-30% of regional fertiliser exports are not moving. Urea prices have climbed about 50% since the start of the war and diammonium phosphate prices have moved broadly in line [20][27]. The WFP has publicly estimated that if the conflict stretches into mid-2026, an additional 45 million people could slip into food-insecure populations [27].

Source: IMF World Economic Outlook April 2026

Data as of Apr 14, 2026CSV

The IMF's April World Economic Outlook, released on 14 April, cut 2026 global growth from its January projection of 3.3% to 3.1% and raised the global inflation forecast to 4.4%. Its adverse scenario — a Hormuz closure extended past 90 days — projects 2.5% growth and 5.4% inflation. The severe scenario puts 2026 growth at 2% and inflation above 6%, conditions Fund economists describe as consistent with recession in advanced economies [28][29].

How this compares to 1984

Contemporary analysts keep reaching for the 1984 Tanker War as a parallel. The comparison undersells the current shock. During the Iran-Iraq war's shipping phase (1984-1988), the combined attacks by both belligerents never disrupted more than about 2% of Gulf shipping traffic; Iran actually lowered its oil price to offset higher insurance premiums, and global real oil prices declined through the decade [30][31]. The current disruption is an order of magnitude larger. Tanker transits have fallen by more than 90%, not 2%, and the inflation pass-through through European gas markets has no 1984 analogue [2][19]. UNCTAD has called the present closure the largest disruption to world energy supply since the 1970s oil shocks [20].

The politics that could still blow this up

In Iran, the ceasefire has opened a visible rift. Basij militia members from the Islamic Revolutionary Guard Corps marched on the foreign ministry in protest on 8 April, and the hardline editor of Kayhan, Hossein Shariatmadari, called the truce "a gift to the enemy" [32]. Those factions argue that Tehran enjoys a rare position of leverage and should hold out for full sanctions relief before reopening the strait. Complicating matters, Iran's new Supreme Leader Mojtaba Khamenei — named after the death of Ayatollah Ali Khamenei in early 2026 — has not appeared in public since his elevation, and a leaked American-Israeli intelligence memo assesses that he is "incapacitated and receiving medical treatment in Qom" [33]. That leaves ratification of any binding ceasefire extension in an ambiguous constitutional state, with the IRGC functioning as the de facto decision-maker.

In Washington, the politics are different but not simpler. The Senate has rejected a War Powers Resolution on Iran four times, most recently on a 47-52 vote that saw Republican Rand Paul cross to vote with Democrats and Democratic Senator John Fetterman cross the other way [34][35]. The 60-day clock from the 1973 War Powers Resolution runs out on or around 1 May. A growing group of Republicans, including Senator John Curtis of Utah, have said publicly that they will not support continued military action beyond that date without a formal authorisation [35]. If the ceasefire holds, the vote may never happen; if it collapses, Congressional resistance may be the hardest ceiling Trump faces.

If the truce collapses

Energy economists and defence analysts are increasingly explicit about the second-order effects of a 90-day-plus closure. The IMF's severe scenario — recession in advanced economies with inflation above 6% — assumes Hormuz stays shut and Gulf fertiliser flows remain disrupted into the northern-hemisphere planting season [28]. Food-import-dependent countries in the Sahel, the Horn of Africa and South Asia would face a second inflation shock on top of rising energy costs [20][27]. Militarily, the most-cited escalation triggers are Iranian strikes on Saudi or Emirati downstream facilities — which would take the bypass pipelines offline — and any incident involving US Navy vessels enforcing the announced blockade [10][12].

The defenders of the US position argue the bombing has worked: Iran's underground enrichment is degraded, its missile production has been disrupted, and its negotiating position is weaker than in any prior round [5]. Critics — including some former JCPOA negotiators quoted by Al Jazeera — counter that the war has destroyed the verification architecture built over a decade and replaced it with a unilateral demand for zero enrichment that no Iranian government can politically accept [11].

That is the narrow ground on which the extension talks now sit. The physical chokepoint is closed, the diplomatic one is nearly closed, and the people trying to reopen both are running against the same deadline the market is.

Key facts at a glance

• Days Hormuz closed: ~43 (tanker traffic effectively zero since 4 March 2026) [2][7]
• Normal Hormuz oil throughput: ~20 million barrels/day [22]
• Brent peak: $126/barrel (8 March 2026) [2]
• Qatar LNG capacity offline: ~17% of global [16]
• Japan SPR release: 80 million barrels, since 16 March [25]
• IMF 2026 growth cut: 3.3% → 3.1% (reference); 2.0% (severe) [28]
• War Powers Resolution 60-day deadline: ~1 May 2026 [35]