Donald Trump claimed on Thursday that a peace deal with Iran is "largely negotiated" and said it includes a provision to reopen the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world's oil supply passes. Iran's government rejected the claim almost immediately, calling Trump's description "incomplete and inconsistent with reality."

The gap between the two statements is significant. Trump's framing suggests a deal is close and that one of its terms addresses the strait, which Iran has repeatedly threatened to close as a pressure point in nuclear and sanctions standoffs. Iran's flat denial suggests no such agreement exists, or that the two sides are far apart on what any framework would actually say.

Why the Strait of Hormuz matters so much

The Strait of Hormuz sits between Iran and Oman at the mouth of the Persian Gulf. Every day, roughly 17 to 20 million barrels of oil move through it, along with large volumes of liquefied natural gas. Saudi Arabia, the UAE, Kuwait, Iraq, and Qatar all depend on the strait to export energy to global markets. A closure or even a credible threat of one is enough to push oil prices sharply higher, because there is no quick alternative route for most of that volume.

Iran has held the threat of closing the strait as leverage for decades. In past standoffs, even rhetorical threats from Tehran moved crude markets. An actual blockade, even partial or temporary, would hit global energy supply hard and fast, with the pain landing heaviest on Asian importers, particularly China, Japan, South Korea, and India.

Trump's claim that a deal would specifically address access to the strait is notable. It would mean Iran agreeing to give up one of its most powerful pressure tools in exchange for whatever relief or guarantees the US is offering. That is a significant concession to put on paper, which may explain why Iran pushed back so sharply.

What to watch next

The disconnect between the two governments' accounts leaves markets and policymakers with little to anchor on. If Trump's description has any basis, the next signal would come from Iranian officials either softening their denial or confirming that technical talks are ongoing. If Iran's rebuttal is accurate, then Trump's announcement may reflect domestic political positioning rather than actual diplomatic progress.

Oil markets are the clearest near-term indicator to watch. A credible deal that includes Hormuz access guarantees would be a meaningful downward pressure on crude prices, since it would reduce one of the most persistent geopolitical risk premiums baked into energy. Conversely, if negotiations collapse or the two sides trade escalating statements, the risk premium rises.

For India, the stakes are direct. India is one of the largest buyers of Middle Eastern oil and relies heavily on Gulf shipping lanes. Any disruption to Hormuz transit would raise import costs, pressure the rupee through a wider current account deficit, and feed into domestic fuel and inflation dynamics. Indian refiners and policymakers will be watching this closely.

There is no confirmed timeline for further talks, no named mediator in the public record, and no text of any draft agreement available. Until one side or the other provides verifiable detail, the factual state of any deal remains contested.