The cost of Trump’s “no” at Hormuz

On Saturday, 26 September, US President Donald Trump announced that he had rejected Iran’s proposal to reopen the Strait of Hormuz and bring hostilities to an end. Within hours, Iranian Foreign Minister Abbas Araghchi said that the intermediaries carrying messages between the two governments had conveyed no such rejection to Tehran. Washington has not stated what, if anything, is to replace the proposal it claims to have declined. Seven months into the closure of the strait, the operative US policy therefore amounts to a public “no”, an unconfirmed private channel and no timetable. Each of those elements carries a measurable cost. None of it is being paid in Washington.

The stakes are quantifiable. In the first half of 2025, roughly 20 million barrels per day of oil and petroleum products passed through the strait – about one-fifth of global petroleum-liquids consumption and more than a quarter of seaborne oil trade – together with roughly one-fifth of the world’s liquefied natural gas (LNG), according to the US Energy Information Administration (EIA).

Since the closure on 4 March, the International Energy Agency (IEA) has described the result as the largest supply disruption in the history of the global oil market. Visible transits fell from a historical average of around 138 a day to as few as six by 12 July.

The EIA’s Short-Term Energy Outlook now assumes flows of about 4.9 million barrels per day, against 21.6 million before the closure, persisting into early 2027. That assumption is a forecast of deadlock, and it is embedded in every fuel-price model in the country.

Begin with diesel, the fuel that moves everything else. The EIA’s weekly on-highway diesel price – the benchmark to which haulage fuel surcharges are indexed – reached $5.652 per gallon on 24 August, the highest weekly reading of 2026, and stood at $5.599 on 31 August, roughly $1.79 above its pre-conflict level: a 47 per cent increase. For an independent owner-operator hauling out of Columbus, Ohio, or a regional grocer in Des Moines, Iowa, that differential is no macroeconomic abstraction. It is the surcharge line on every invoice.

The second channel is insurance. War-risk premiums for Gulf transits, quoted as a percentage of hull value, rose from 0.125 per cent to between 0.2 and 0.4 per cent per transit before the first strikes had even been launched. Cover remains available but, as one marine insurance analyst told Al Jazeera in July, on terms that “can materially change the economics of a voyage”. By early August, as the crisis passed the 150-day mark, the freight industry was working through a backlog of only partially paid contracts. Those costs attach to cargo arriving at Houston, Long Beach and Baltimore, and are passed downstream to freight-dependent manufacturers across Michigan and Ohio.

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Aggregate forecasts understate all of this. The International Monetary Fund (IMF) has argued that the global effect of the supply shock is limited because investment demand driven by artificial intelligence offsets it, while a July Wall Street Journal survey of 74 economists put the probability of a US recession at 25 per cent, down from 33 per cent. The UN Conference on Trade and Development (UNCTAD) nonetheless expects trade and growth to slow in 2026. Both can be true.

A data-centre construction boom in Northern Virginia does nothing to lower the fuel bill of a dairy haulier in Wisconsin. The burden is distributional, and the distribution runs against the households and small firms least able to hedge.

This is where Saturday’s ambiguity becomes an economic variable rather than a diplomatic one. Underwriters and commodity desks do not price the most probable outcome; they price the range of plausible outcomes, and they price the worst of them first. When the president’s public position is rejection and the counterpart’s public position is that no rejection has arrived, that range spans everything from renewed strikes to imminent talks. An insurer cannot write cover against both. It writes against escalation and charges accordingly. Ambiguity may retain some value at a negotiating table. In a war-risk quote, it is pure cost with no offsetting benefit.

Washington has already shown that it knows what an instrument of de-escalation looks like. On 3 March, the president ordered the US International Development Finance Corporation (DFC) to provide political-risk insurance and guarantees for all maritime energy trade through the Gulf, with naval escorts “if necessary”. In June, the two governments concluded a memorandum of understanding (MoU) that included provisions on the strait; it did not hold, and the US reimposed its blockade. In early August the president asserted “complete control” over the strait. Three weeks later, diesel hit its 2026 high. The record is not one of an absence of alternatives. It is one of alternatives announced, not sustained and not accounted for.

None of this requires a judgement on the merits of Tehran’s proposal. It requires disclosure.

A diplomatic opening exists; the US government says it has declined it; the counterpart says it has not been told so. The minimum owed to the haulier paying $5.60 a gallon and the manufacturer absorbing a war-risk surcharge is a public statement of what the US intends instead, and by when.

If the plan is to wait, taxpayers should be told that the deadlock is a scheduling decision. If the March insurance programme or the June framework is being revived, the terms should be published. The price of silence is already posted – on every pump along Interstate 80.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.