Trump Rejects Iran Peace Counteroffer as 'Totally Unacceptable'; Strait of Hormuz Standoff Deepens

President Donald Trump dismissed Iran's formal response to the latest U.S. peace proposal as 'TOTALLY UNACCEPTABLE' on Sunday, after Tehran countered with demands for war reparations, full sovereignty over the Strait of Hormuz, and an end to sanctions — a package that deepened the stalemate in the 10-week-old conflict and sent oil prices surging past $100 a barrel.

The Details

Iran submitted its response to the U.S. proposal through Pakistani mediators on Sunday, May 10. Rather than accept the American terms, Iranian state media characterized the U.S. plan as a demand for 'surrender' and rejected it outright, while presenting counter-demands of its own.

Iran's conditions included war reparations, full sovereignty over the Strait of Hormuz, an end to U.S. sanctions, and the release of frozen Iranian assets, according to multiple reports. Tehran also demanded that the United States end its blockade of Iranian ports as a precondition for Iran to reopen the Strait of Hormuz to commercial shipping.

On the nuclear issue, Iran refused to agree to U.S. demands regarding its stockpile of highly enriched uranium. Instead, Iran proposed separate nuclear negotiations, offering to dilute some uranium and transfer the remainder to a third country — with a provision that it be returned if Washington exits any future deal. Iran reportedly agreed to suspend uranium enrichment, but for a shorter period than the 20-year moratorium the U.S. proposed, and rejected any requirement to dismantle its nuclear facilities.

President Trump responded on Truth Social: 'I have just read the response from Iran's so-called Representatives.' He added: 'I don't like it — TOTALLY UNACCEPTABLE!'

Israeli Prime Minister Benjamin Netanyahu, speaking on CBS's 60 Minutes, said the war with Iran is 'not over' because there is 'more work to be done.' Netanyahu cited enriched uranium that 'has to be taken out of Iran,' enrichment sites that 'have to be dismantled,' and ballistic missiles Iran still wants to produce. 'There's work to be done,' he said.

Iranian officials pushed back publicly. President Masoud Pezeshkian wrote on X in Persian: 'We will never bow our heads before the enemy, and if talk of dialogue or negotiation arises, it does not mean surrender or retreat.' Iranian Parliament spokesperson on national security Ebrahim Rezaei said: 'Americans will not obtain through a failed war what they failed to gain in negotiations.'

Even as diplomatic channels remained stalled, a Qatari LNG tanker crossed the Strait of Hormuz on Sunday — the first commercial vessel reported to have transited the waterway since the war began roughly 10 weeks ago. The passage was reportedly approved by Iran as a confidence-building gesture toward Qatar and Pakistan. Iran's Revolutionary Guards denied that any commercial ship had crossed the strait, contradicting those reports.

Military tensions did not ease over the weekend. Iran continued drone attacks on Gulf neighbors: the UAE intercepted two drones, Qatar condemned a drone attack on a cargo ship in its waters, and Kuwait reported hostile drones entering its airspace. Iranian Army spokesperson Brigadier General Mohammad Akraminia warned of 'surprising options' if adversaries made another 'miscalculation.' Iran's new Supreme Leader, Mojtaba Khamenei, issued what state broadcaster Tasnim described as 'new and decisive directives' for military operations.

Context

The Strait of Hormuz has been effectively closed to commercial traffic since the U.S.-Iran war began approximately 10 weeks ago, choking global energy supply routes. Pakistani mediators have been facilitating the back-channel negotiations between Washington and Tehran. Beijing hosted Iranian Foreign Minister Abbas Araghchi last week, with Chinese official Wang Yi reaffirming the 'strategic partnership' while urging a diplomatic resolution. The unresolved standoff now hangs over President Trump's upcoming summit with Chinese President Xi Jinping in Beijing later this week. Oil prices surged on Monday in reaction to the collapsed talks: WTI futures advanced 4.96% to $100.30 per barrel and Brent crude rose 4.92% to $105.76 per barrel.

What's Next

The Trump-Xi summit in Beijing later this week brings the Iran standoff into a broader great-power context, with China having just reaffirmed its strategic partnership with Tehran. Whether Pakistani mediators can revive the back-channel process after Trump's public rejection remains unclear. Iran's demand that the U.S. lift its port blockade before reopening Hormuz sets up a direct sequencing dispute — neither side appears willing to move first. Meanwhile, Iran's continued drone attacks on Gulf states and the military directives from its new Supreme Leader signal that the battlefield may intensify even as diplomatic talks stall.