How a Tehran–Washington Economic Agreement over the Strait of Hormuz Could Lead to an End to the War, Sanctions Relief, the Release of Iran’s Frozen Assets, and U.S. Pressure on Arab States to Compensate Iran for War-Related Damages

Introduction

The military confrontation between Iran and the United States has once again elevated the importance of the Strait of Hormuz from a regional issue to a direct concern for the global economy. The sharp decline in vessel traffic through the strait in recent days and disruptions to energy flows have demonstrated that Hormuz is not merely a geographical waterway; it is one of the world’s most critical links to the global energy economy. Recent reports indicate a significant decline in commercial shipping through the waterway, while oil and petroleum product prices have simultaneously increased in global markets.

The importance of Hormuz for the countries of the region is undeniable. A significant portion of the Persian Gulf states’ exports of crude oil, LNG, and energy products must pass through this route. Even after the development of pipelines and alternative routes, their capacity cannot be compared with the enormous volume of energy transported through Hormuz.

Under such circumstances, Iran’s strategic question should not merely be:

“How can we use Hormuz as a pressure lever?”

The more important question is:

“How can we transform the importance of Hormuz into an economic, political, and diplomatic asset that continues to generate revenue and bargaining power for Iran even after the war ends?”

The answer may lie in a different concept:

Transforming Hormuz from an instrument of confrontation between Iran and the United States into the foundation of a joint economic agreement.

1. Hormuz: The Lifeline of the Persian Gulf Economy

The importance of Hormuz is not limited to oil.

The strait is a major route for the transportation of:

• Crude oil;
• Gas condensates;
• Petroleum products;
• LNG;
• LPG;
• Petrochemical products;
• Industrial goods;
• Food products;
• Equipment and consumer goods.

U.S. energy statistics indicate that disruptions in Hormuz can directly affect global energy markets. In 2026, disruptions to LNG traffic through the strait also placed pressure on global gas markets; the EIA reported that, at one point, disruptions in Hormuz affected approximately 20% of global LNG supply.

This dependence means that the Arab states of the Persian Gulf, despite investments in alternative routes, cannot eliminate Hormuz from their economic equation in the short term.

The UAE, in response to the current crisis, is developing alternative energy and trade routes. Yet these efforts themselves demonstrate how strategically important dependence on Hormuz remains for the economies of the region.

2. The Strategic Mistake: Using Hormuz Solely as a Military Instrument

For years, Iran has used its geographical position around Hormuz as a deterrence lever.

This approach is understandable from a national-security perspective. However, it has a major limitation:

A military lever does not necessarily translate into sustainable revenue.

Threatening to close the strait can increase oil prices, shock global markets, and impose significant costs on various countries. At the same time, however, it can encourage the formation of security coalitions against Iran, accelerate the development of alternative routes, and increase economic pressure.

Iran should therefore move one step further.

Instead of merely saying:

“I can close Hormuz,”

Iran should say:

“I can keep Hormuz secure and build a sustainable economic system around that security.”

This distinction is the foundation of a new strategy.

3. The Main Proposal: Establishing a Joint Iran–U.S. “Hormuz Fund”

The central proposal of this article is the establishment of a Joint Hormuz Maritime Security, Services and Development Fund between Iran and the United States.

Under this model, Iran and the United States would agree to replace permanent confrontation over Hormuz with a joint mechanism for:

• Maritime security;
• Navigation services;
• Maritime traffic management;
• Search and rescue;
• Oil-spill response;
• Marine environmental protection;
• Port infrastructure;
• Crisis management.

Ships and companies using these services would pay clearly defined and transparent service fees, with the resulting revenue deposited into a joint fund.

The key point is that the United States should also receive direct financial benefits from this fund.

This could be the most important distinction between this proposal and traditional approaches to the Strait of Hormuz.

4. Why Should the United States Have a Financial Interest in the Fund?

If all revenues from the fund were allocated exclusively to Iran, Washington would have limited incentives to defend such an agreement.

However, if the model were designed so that the United States also gained economic revenue from the security and commercial traffic of Hormuz, the equation would change fundamentally.

For example, a revenue-sharing model could be established in which:

Hormuz service revenues → Joint Fund → Iran’s share + U.S. share + security and development costs

would be allocated accordingly.

Under such a framework, the United States would no longer be merely a political mediator or guarantor. It would become an economic partner in the Hormuz agreement.

This is highly significant.

If the United States understood that:

“The security of Hormuz also creates direct economic benefits for the U.S. economy and generates revenue through the new mechanism,”

then preserving the agreement would itself become an economic interest for Washington.

5. The Most Important Secondary Effect: Changing U.S. Behavior toward the Arab States

At this stage, the Hormuz proposal could enter its second dimension.

The Arab states of the Persian Gulf require U.S. cooperation to maintain their security and protect their energy exports. In the current crisis as well, the role of the United States in the security architecture of the Persian Gulf remains highly significant.

Therefore, if the United States had a direct financial interest in a new economic mechanism involving Iran and Hormuz, Washington’s incentive to preserve the agreement would not be limited to energy security.

The United States could use its political and security influence over the Arab states to encourage them to participate in a broader regional agreement.

Such participation could include:

• Financing the fund;
• Participating in the reconstruction of damaged infrastructure;
• Paying a share of war-related costs;
• Participating in development projects;
• And, subject to a legally agreed framework, compensating Iran for part of the damages it has suffered.

In other words, U.S. financial interests in Hormuz could create a new incentive for Washington to encourage Arab states to move toward economic cooperation with Iran.

6. Why Are the Arab States More Vulnerable to U.S. Pressure?

The Arab states of the Persian Gulf possess enormous financial resources, but their regional security remains substantially dependent on their relationships with the United States.

Therefore, if Washington concluded that:

Iran–U.S. agreement = Hormuz security + lower energy prices + U.S. economic revenue + end of the war

then the United States could use its influence to persuade Arab states to participate in the agreement.

This is precisely where Iran’s geopolitical advantage could be transformed into a multilateral economic lever.

7. The Issue of Iran’s Frozen Assets

One of the most important issues in negotiations between Iran and the United States is the release of Iran’s frozen assets.

Under normal circumstances, the United States might regard the release of these assets as a major political concession.

However, within a comprehensive Hormuz agreement, the issue could be defined differently.

For example:

Iran would provide:

• Guarantees for the security and continuity of maritime navigation;
• Cooperation in maritime management;
• Suspension of actions threatening international commerce;
• Acceptance of a joint monitoring mechanism.

The United States would provide:

• Reduction or suspension of certain sanctions;
• Gradual release of frozen Iranian assets;
• Facilitation of trade;
• Establishment of a designated financial channel;
• Support for investment in Hormuz-related projects.

Under this model, the release of Iran’s frozen funds would no longer be a “one-sided concession.” It would become part of a larger economic transaction.

8. Why Could U.S. Financial Interests Contribute to Faster Sanctions Relief?

This is one of the most important dimensions of the proposal.

If the United States reached an agreement with Iran solely to end the war, it might not have sufficient incentives to rapidly remove all sanctions.

However, if the Hormuz agreement created direct and measurable economic benefits for the United States, Washington’s calculation could change.

The United States could then arrive at the following conclusion:

Severe sanctions on Iran → greater risk of disruption in Hormuz → lower fund revenues → higher energy prices → pressure on American consumers

Conversely:

Gradual sanctions relief → greater stability in Iran → restoration of maritime traffic → increased fund revenues → greater U.S. economic benefit → lower energy prices

This relationship could create an economic incentive for sanctions relief.

In effect, Iran could seek to transform sanctions from a U.S. instrument of pressure against Iran into part of a broader economic bargain.

9. Trump and the Logic of the “Deal”

This proposal can also be examined from the perspective of the transactional approach associated with the Trump administration.

Trump generally tends to view agreements as more attractive when they can be presented to the public as tangible and measurable achievements.

Under such a scenario, the United States could present the end of the war not merely as a political retreat, but as a major economic and security agreement:

End of the war + reopening of Hormuz + lower energy prices + creation of U.S. revenue + guaranteed maritime security

Such a package could be significantly more attractive to Washington than a purely political agreement.

At the same time, Trump could present the end of the war as a political victory, while Iran could present the end of the war, preservation of its position in Hormuz, release of its assets, and sanctions reduction as its own achievements.

In this way, both sides could claim a political victory.

10. How Could a “Victory” for the United States Benefit Iran?

This is a crucial component of the negotiations.

If the U.S. administration needs to present the agreement domestically as a success, Iran could transform this political requirement into a negotiating instrument.

For example, the United States could announce:

“The United States succeeded in guaranteeing freedom of navigation through one of the world’s most important energy corridors.”

Iran, meanwhile, could announce:

“Iran succeeded in preserving its security role and strategic position in Hormuz and secured a share in an international economic mechanism.”

In this scenario, neither side would be forced to portray the agreement as surrendering to the other.

This is what can be described in international negotiations as win-win political framing.

11. Compensation by Arab States: The Second Stage of the Agreement

After establishing the primary agreement between Iran and the United States, another issue could be pursued:

Compensation for war-related damages.

Iran could argue that regional states that supported military or logistical activities during the war should contribute to reconstruction and compensation.

However, to make this issue practical, it may be preferable to establish a Regional Reconstruction and Compensation Fund rather than pursue direct confrontation.

Under this model, Arab states could participate not necessarily through direct and politically sensitive compensation payments, but through:

• Investment;
• Contributions to the fund;
• Financing reconstruction projects;
• Port development;
• Energy projects;
• Economic cooperation.

The United States could play an important role in guaranteeing the implementation of such a mechanism.

12. The Proposed Chain of Benefits

If properly designed, the proposal could create the following chain of benefits:

Hormuz security

Increased vessel traffic

Higher revenues for the joint fund

↓

Iran’s financial share

U.S. financial share

↓

Greater U.S. incentive to preserve the agreement

Greater U.S. pressure on Arab states

Arab participation in the fund and reconstruction

Greater pressure to resolve compensation issues

Release of Iran’s frozen assets

Gradual sanctions reduction

Iran’s return to global trade

Increased exports of oil, gas, and petrochemicals

More sustainable revenue for Iran

This chain is, in effect, the core of the present proposal.

13. Why Should Iran Not Focus Solely on “Transit Fees”?

There is an important legal and economic consideration.

In international straits used for navigation, the right of transit passage enjoys specific protection under the law of the sea. Therefore, designing a simple system to “charge every ship merely for passing through” could face legal and political challenges.

Article 38 of UNCLOS recognizes the right of transit passage, while Article 43 provides for cooperation regarding navigational and safety facilities and pollution control.

Therefore, the more professionally designed approach would be:

Iran should establish a financial system for genuine maritime, security, navigation, search-and-rescue, and environmental-protection services.

In this case, payments would be made in exchange for specific services, rather than merely for the right of passage.

This could substantially strengthen the international legitimacy of the proposal.

14. What Would Iran Give the United States, and What Would Iran Receive?

Iran would provide:

• Security and stability of maritime navigation in Hormuz;
• Maritime cooperation;
• Reduced risks to global commerce;
• Participation in monitoring and management mechanisms;
• Guarantees for the continuity of energy flows.

Iran would receive:

• A sustainable share of Hormuz-related economic revenues;
• Gradual release of frozen assets;
• Sanctions reduction;
• Increased oil and petrochemical exports;
• Greater access to international markets;
• Foreign investment;
• U.S. support in resolving compensation issues.

The United States would receive:

• An end to the war;
• Lower energy prices;
• Maritime security;
• Reduced costs associated with military presence;
• A financial share in the Hormuz economic mechanism;
• A political achievement that could be presented to the American public;
• A formal role in the new regional security architecture.

For this reason, the proposal should not be viewed as a concession to the United States, but rather as a mutual-interest transaction.

15. Iran’s Most Important Historic Opportunity

Iran is currently one of the few countries whose geographical position is sufficiently important to influence global energy markets.

However, geography becomes genuine power only when sustainable economic value is extracted from it.

Iran’s real power should not be limited to its ability to disrupt Hormuz.

Its real power could lie in ensuring that:

Hormuz security is impossible without Iran, and the Hormuz economy cannot operate sustainably without Iranian participation.

This is the difference between “destructive power” and “economic power.”

Destructive power may create a crisis; economic power can create a sustainable system.

Conclusion

The Strait of Hormuz is not merely a geographical location for Iran; it is a unique geopolitical asset.

Under current circumstances, Iran could utilize this asset on three levels:

Level One: Security

Guaranteeing the security and continuity of maritime navigation.

Level Two: Economics

Establishing a joint fund and transforming Hormuz’s maritime and security services into a sustainable source of revenue.

Level Three: Diplomacy

Using U.S. economic interests to create incentives for Washington to pressure Arab states, resolve compensation issues, release Iran’s frozen assets, and reduce sanctions.

The most important element of this proposal is that the United States must also derive direct financial benefits from the Hormuz agreement.

If the United States merely provides security for Hormuz on behalf of Iran, the agreement could remain politically fragile. However, if the United States receives a share of revenues generated by Hormuz-related services and trade through a transparent and international economic fund, maintaining Hormuz security would also become an economic interest for Washington.

In that case, the United States would not only have a stronger incentive to end the war; it could also become one of the most important supporters of maintaining the agreement in order to preserve its own revenue stream.

At the same time, these interests could strengthen the U.S. bargaining position vis-à-vis the Arab states. Washington could ask them to participate in regional reconstruction, compensation for damages, and the creation of a new economic mechanism.

Meanwhile, if sanctions relief and the release of Iranian assets were incorporated into the final agreement, the United States could present the end of the war as a political and economic victory, rather than a retreat.

Under such a scenario, Iran could also achieve significant gains:

End of the war, sanctions reduction, release of frozen assets, restoration of exports, economic participation in Hormuz, and the transformation of geopolitical position into sustainable revenue.

Of course, this scenario is not certain. Its realization would depend on the political will of Tehran and Washington, military conditions, the positions of regional states, energy markets, and the framework of international law. The current reality also indicates that the crisis remains highly fluid and that the United States continues to increase economic pressure on Iran.

Nevertheless, from the perspective of game theory and economic diplomacy, the value of this proposal lies precisely in this point:

Iran should not merely ask the United States to lift sanctions; it should create conditions under which lifting sanctions also becomes economically and politically beneficial for the United States.

And perhaps more importantly:

Iran should not merely ask the United States to pressure Arab states to pay compensation; it should link U.S. economic interests to the resolution of this issue.

Ultimately, Iran’s strategic objective should be to transform the equation:

“Hormuz = Crisis”

into:

“Hormuz = Security + Iranian Revenue + U.S. Revenue + Regional Stability”

If such a strategic shift in perspective can be achieved, the Strait of Hormuz could be transformed from a potential flashpoint for war into the most important platform for ending the war and initiating a new economic order in the Persian Gulf.