Netanyahu Rejects Trump Gaza Proposal as Iran Sets Six Demands on Hormuz
Israel's refusal to back a US-brokered settlement coincides with Tehran's new preconditions for reopening the strait, sustaining pressure on Saudi crude flows to Asia.
Israeli Prime Minister Benjamin Netanyahu rejected a Trump administration peace proposal over the weekend (2026-08-10), leaving unresolved a regional conflict that has already forced Saudi Arabia to divert more than 5 million barrels a day of crude exports through its Red Sea terminals.8,1
Iran set six demands for a peace deal with the United States on Monday (2026-08-10), according to a statement cited by Oilprice, while the Houthis claimed a strike on Saudi Aramco's Jazan refinery. Neither claim has been independently verified. ICE Brent crude front-month traded at $87.20 a barrel on Monday (2026-08-10), down 0.65%, after rallying more than 5% over the previous three sessions.6,7
President Trump signalled he would rely on economic pressure rather than military strikes, saying the US was "only semi-negotiating" with Tehran on the Strait of Hormuz.7
The strait normally carries 21% of global oil supply. In 2022 it averaged 21 million barrels a day, up 2.4 million barrels a day from pandemic-era lows.2
About 10 million barrels of Saudi crude have cleared the strait in recent days, Rystad Energy reported, as supertankers continued loading at Ras Tanura in the Persian Gulf. But the reliance on Red Sea export routes remains high. Saudi Aramco operates a 5-million-barrel-a-day East-West pipeline that was temporarily expanded to 7 million barrels a day in 2019, giving the kingdom capacity to bypass Hormuz entirely if needed.5,2
Chinese buyers have taken advantage. Saudi Arabia has turned to spot sales to Asia after Hormuz disruptions began in late February (2026-02-28), trade sources told Reuters on Thursday (2026-07-02). The spot pricing for July-loading cargoes was "very attractive" for Chinese refiners, one source said. Traders expect Aramco to cut its official selling prices for August-loading barrels to Asia.5
The divergence between US and Israeli priorities has widened. Despite close coordination in the early days of the Iran conflict, Washington and Jerusalem now face different constraints. Trump's willingness to let economic pressure build rather than escalate militarily contrasts with Netanyahu's domestic imperatives, which the Atlantic Council characterised in June (2026-06-10) as a once-modest gap that has now "opened to a chasm."4,7
Industry estimates suggest every week of disruption in the Strait of Hormuz removes nearly 100 million barrels from global supply. Since the conflict began in late February (2026-02-28), the market has experienced an estimated shortfall of nearly 1 billion barrels, Saudi Aramco CEO Amin Nasser noted.1
Trump has previously linked any Iran deal to Gulf states joining the Abraham Accords, a demand Foreign Policy described in June (2026-06-01) as "untethered to reality in the Gulf." The administration may be using the linkage to deflect domestic criticism if it needs to pressure Israel, according to the analysis.3
Yet Netanyahu's rejection of the Gaza proposal leaves no clear path to de-escalation.8
Saudi Arabia's ability to sustain 5 million barrels a day through Red Sea terminals depends on infrastructure that was designed as a backup, not a primary export route. The kingdom has demonstrated it can operate at this level, but the longer Hormuz remains contested, the more strain falls on alternate pipelines and loading terminals.1,2
Trump's stated preference for economic pressure over strikes suggests tolerance for a prolonged standoff. But every additional week of uncertainty removes another 100 million barrels from supply and leaves Asian buyers bidding for Saudi spot cargoes that were never meant to clear at a discount.7,1,5