U.S. and Iranian negotiators in New York are discussing a phased agreement that could see Iran reopen the Strait of Hormuz in exchange for Washington lifting its blockade on Iranian ports. The proposal aims to break a stalemate where neither side wishes to surrender leverage first.

Phased de-escalation framework

A senior Iranian official described the arrangement as a gradual path out of the conflict. Under this framework, Iran would permit transit via the Strait of Hormuz while the U.S. agrees to remove its economic blockade. The report indicates Iran may also gain access to assets that have been frozen. This structure represents a tentative remedy following the collapse of a temporary peace deal two months ago.

Behind Tehran’s stance is a recognition that a prolonged war carries significant economic consequences. However, forming a deal acceptable to both sides remains a key obstacle for negotiators.

Political pressures and market signals

Iranian President Masoud Pezeshkian stated the country is willing to make a peace deal with the U.S. before the November midterms. Speaking at the United Nations General Assembly, Pezeshkian urged Washington to return to the June memorandum of understanding that established a framework for a temporary ceasefire before collapsing.

President Donald Trump said his administration could reach a peace agreement with Iran after the midterms. Earlier this week, Trump warned he could "annihilate" Iran if Tehran fails to reach a deal. A White House official told Reuters that Iran is "desperate" for a deal and that Trump "holds all the cards."

Geopolitical and economic friction

Tensions continue to manifest in public rhetoric and financial markets. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf mocked the Trump administration over rising U.S. Treasury yields, warning that Iran could return the U.S. to "1970s rates," along with high gas prices and diesel shortages.

Treasury Secretary Scott Bessent defended Trump’s aviation restrictions on Iran, stating that more than 80% of the country’s external flights had likely been shut down.

Market participants are adjusting probabilities for a near-term resolution. Betting crowd on Polygon-based Polymarket now assigns an 8% chance that the U.S. and Iran reach an agreement over traffic in the Strait of Hormuz by September 30. This represents an increase of 5 percentage points in a week.

What the numbers show

The divergence between diplomatic optimism and hard power metrics highlights the complexity of the negotiation. While Polymarket odds for a specific maritime agreement rose 5 percentage points to 8%, this remains a low probability event within a one-month window. Simultaneously, the U.S. maintains significant coercive leverage, with Treasury Secretary Scott Bessent confirming that over 80% of Iran's external flights are shut down. The data suggests that despite rising expectations for a deal, the current status quo involves severe economic isolation for Iran, which serves as the primary pressure point driving Tehran toward the proposed phased reopening of the Strait of Hormuz.

Iran's Parliament Speaker Mohammad Bagher Ghalibaf mocked the Trump administration on Thursday, warning that rising U.S. Treasury yields could return America to "1970s rates" accompanied by high gas prices and diesel shortages. The comment followed the benchmark 10-year Treasury yield topping 5.1%.

Yield implications for consumers

Ghalibaf posted on social media platform X that the 5.1% yield on ten-year Treasury bonds would serve as the base rate or floor for the next two years. He stated, "Happy 5.1% 10Y America. Mashallah," and urged the U.S. to "celebrate" the level.

Higher Treasury yields directly impact consumer borrowing costs. Banks typically add profit margins to mortgages based on these yields, resulting in higher interest rates and increased monthly payments for homebuyers. Similarly, banks face higher funding costs for auto loans, which may lead to increased credit card payments as borrowing costs surge.

Geopolitical context and sanctions

The remarks reference the economic crises of the 1970s, specifically the 1973 oil embargo by oil-producing nations against Western countries supporting Israel, and the 1979 Iranian revolution which triggered global oil shortages. Ghalibaf warned that Iran would return the U.S. to this era of "high gas prices, diesel shortages and bell-bottoms."

This rhetoric coincides with reports from the United Nations General Assembly (UNGA) where Iran's Foreign Minister Abbas Araghchi indicated a desire to make a deal. He stressed the U.S. return to conditions laid out in the June Memorandum of Understanding (MoU).

Pressure from US officials

U.S. Treasury Secretary Scott Bessent stated that flight restrictions under Operation Economic Outcast were effective, citing an 80%-90% reduction in external flights in Iran. Bessent previously threatened to remove countries and institutions supporting Iran from the dollar system and impose sanctions.

In response, Iran's Security Chief Mohsen Rezaee warned neighboring countries against participating in restrictions. He declared that the Strait of Hormuz will remain closed until the U.S. agrees to return to the MoU conditions, noting that Tehran had sent these terms to the Trump administration via intermediaries.

What the Numbers Show

The divergence between diplomatic signals and market realities is stark. While Iranian officials publicly mock the 5.1% yield as a sign of U.S. economic fragility, the simultaneous disclosure of an 80%-90% reduction in Iranian external flights indicates severe operational constraints on Tehran's connectivity. This suggests that while Iran leverages energy market fears (the Strait of Hormuz closure threat) as a bargaining chip, its own infrastructure is significantly isolated by current U.S. pressure tactics.