Mohan Sinha
26 Sep 2026

NEW YORK CITY, New York: U.S. and Iranian negotiators in New York are discussing a possible phased deal to end their nearly seven-month conflict, with the reopening of the Strait of Hormuz and the lifting of the U.S. economic blockade emerging as central issues.

Sources close to the talks said both sides are trying to find a way forward without giving up their leverage.

The Strait of Hormuz has become the main bargaining point. Iran wants the U.S. to ease economic pressure, while Washington wants shipping to move freely through the strategic waterway, a major route for global oil supplies.

Six sources, including Iranian, regional and Western officials, said the negotiations faced a major problem because neither side wanted to make the first concession. Iran is aware of the economic cost of a prolonged conflict, while the U.S. wants its pressure campaign to produce concessions.

A senior Iranian official said a phased agreement could break the deadlock. Under the proposal, Iran would allow ships to pass through the Strait of Hormuz while the U.S. lifted its blockade. Tehran could also gain access to some frozen assets.

"One way forward would be to solve the crisis in stages. The first would be to end the blockade and reopen Hormuz," the official said on the sidelines of the UN General Assembly.

The proposal would require President Donald Trump to accept another temporary arrangement after an earlier understanding collapsed in July. The negotiators also face the challenge of creating commitments that both countries believe will last.

Trump has said he believes a deal could be reached after the U.S. congressional midterm elections on November 3. A senior European official said Iran had presented a long list of demands.

A White House official said Trump believed Washington held a strong position because of its control over the waterway and the pressure on Iran's economy. The official said Trump remained willing to talk if conditions were right, but did not believe the U.S. needed to negotiate from a weak position.

The economic pressure has included new sanctions targeting Iran's remaining commercial airlines and support networks. Washington says the measures are intended to cut financial lifelines supporting the Iranian government and Revolutionary Guards. Trump has warned that Iran's economy could deteriorate further without a deal.

A possible agreement before the midterms could reduce tensions in the Gulf, help restore shipping through Hormuz and potentially ease pressure on global oil and U.S. gasoline prices. Reuters cited analysts who said the election date could also narrow the diplomatic window if no agreement is reached.

Regional sources said Iran may be prepared to remove its demand for transit fees from the main agreement and place it in a separate document. Middle East states have opposed such fees. The sources said this would not mean Iran had abandoned its wider position on control of the waterway.

Iran wants to preserve its administrative role over Hormuz, while Washington and Middle East countries are focused on restoring freedom of navigation. The disagreement means the two sides must address whether the strait will reopen and, if so, under what conditions.

The Middle East states told Trump that they rejected any arrangement that would give Iran exclusive control over Hormuz. They stressed that ships must be able to use the waterway freely and that it should not become a lasting tool of pressure against countries in the region.

The dispute has left diplomacy under pressure.