Trump Reviews Iran Peace Proposal Amid US Naval Blockade in Strait of Hormuz

President Donald Trump is reviewing a new peace proposal from Iran amid escalating tensions in the Strait of Hormuz, where a US naval blockade is now underway and a tanker has reportedly been attacked. Oil prices have steadied around $98 to over $110 per barrel as traders assess the viability of Trump's plan to guide neutral ships through the vital waterway, which carries a fifth of the world's oil supply.

The blockade, which Trump has directed advisers to prepare for an extended duration, aims to pressure Iran's creaking oil industry into submission. Treasury Secretary Scott Bessent stated that the US is "suffocating" Iran economically and financially, predicting Tehran's rulers will eventually buckle under the strain. Despite this hardline stance, Trump has cast some doubt on the Iranian proposal, which reportedly seeks an interim deal to reopen the strait in exchange for lifting the blockade on Iranian ports—while separating it from nuclear issues. A tanker successfully crossed Hormuz recently, but reports of an attack on a UK carrier and another vessel highlight the risks.

Iran's defiance persists, with energy strikes defying US pressure, even as Washington and Tehran eye fresh face-to-face talks before an existing two-week ceasefire expires next week. Meetings in Islamabad over the weekend failed, but discussions continue, raising cautious hopes for de-escalation. The US has also ramped up scrutiny of China's ties with Iran, threatening sanctions on banks aiding Beijing's purchases of Iranian oil ahead of a Trump-Xi summit.

Domestically, the conflict is taking a toll: a recent poll shows 66% of Americans disapprove of Trump's handling of the Iran war, citing sky-high gas prices and economic strain. Globally, the UAE's announcement to leave OPEC adds uncertainty to oil markets, while EU officials warn of a "real" recession risk from disrupted supplies.

In Asia, Japanese politician Yoshiko Takaichi is traveling, including a meeting with Trump, as discussed on Bloomberg Daybreak Asia, amid broader efforts by the US and Israel to ease energy worries. These diplomatic moves coincide with Trump's flurry of trade actions, such as 100% tariffs on semiconductor imports (with exemptions for US-bound production) and hikes on nations buying Russian or Iranian energy.

What happens next remains fluid: Trump could accept the peace offer, extend the blockade, or resume hostilities, all while markets brace for volatility. Shippers, oil-dependent economies like Europe and Asia, and US consumers face prolonged uncertainty, with potential ripple effects from higher energy costs to strained alliances.