Iran‘s latest demands for reopening the Strait of Hormuz show Tehran believes it has gained the upper hand in its confrontation with the United States, former Defense Secretary Mark Esper said Sunday, as negotiations over one of the world’s most important shipping routes enter a critical phase.

The comments came after Iranian officials said a deal with neighboring Oman on new shipping arrangements through the strait is in its final stages, while insisting the waterway will not fully reopen unless Washington meets a series of additional conditions, including compensation and sanctions relief.

Esper, who served as defense secretary during President Donald Trump‘s first administration, said the demands leave little room for compromise and reflect a more aggressive negotiating posture from Tehran.

“They’ve put forward demands of the United States, which frankly are ridiculous and should be rejected out of hand,” Esper said during an appearance on ABC’s This Week.

Newsweek reached out to the White House on Sunday.

Why the Strait of Hormuz Matters

The Strait of Hormuz is one of the world’s most strategically significant waterways, carrying roughly one-fifth of global oil shipments under normal conditions.

The route has been at the center of the conflict between Iran, the United States and its allies after Tehran moved to restrict commercial shipping following U.S. and Israeli military operations earlier this year.

On Sunday, Iranian Foreign Minister Abbas Araghchi said an agreement with Oman establishing new shipping routes through the strait was in the “final stages.” However, he reiterated that Iran would not fully reopen the waterway unless a broader set of demands is addressed by the United States.

According to Iranian officials, those conditions include compensation for damage caused during the conflict, the lifting of sanctions and other measures Tehran says are necessary before unrestricted commercial traffic can resume. Mohammad Bagher Zolghadr, secretary of Iran’s Supreme National Security Council, said the demands reflected the will of the Iranian people and that Tehran would not back down “either in war or in negotiations.”

The developments came just days after Trump expressed confidence that an agreement could soon be reached and suggested substantial progress had been made toward reopening the strait.

Esper Says Tehran Thinks It’s Winning

Esper said Iran’s latest position should be viewed as a sign of confidence rather than compromise.

The former Pentagon chief highlighted demands that include ending U.S. military operations against Iran and its regional allies, lifting sanctions and ending the U.S. naval blockade. Iran has also called for the withdrawal of American naval and air forces from around the country, compensation for war-related damage and the release of frozen Iranian assets.

“So it’s gone beyond the pale,” he said.

More importantly, Esper argued, the demands reveal how Iran views its bargaining position.

“But what it tells you is two things,” he said. “First of all, they haven’t apparently left any room for negotiation.”

“Secondly and more importantly, it shows that they believe they have the upper hand, they believe they’re winning, and they are emboldened.”

Iran appears to be betting that its leverage over the Strait of Hormuz will force Washington to make concessions.

Joshua Tallis, a former senior U.S. Navy official now serving as director of the Center for Naval Analyses’ Ally and Partner Security Affairs program, recently told Newsweek:

“With relatively few and inexpensive weapons, Iranian strikes on commercial shipping create a cascade effect throughout the global trading system as shipping lines, insurance companies, and seafarers reassess the risks of transiting.”

Critics of the emerging Oman proposal have also argued that formalizing Iranian authority over shipping routes in the strait could hand Tehran a significant strategic victory and challenge longstanding norms governing freedom of navigation through the critical waterway.

“These demands they’ve now raised show that they are emboldened, that they feel confident about their position in the world,” Esper said.

Trump Sees Progress While Iran Raises the Stakes

Esper’s comments underscore a contrast between the Trump administration‘s public assessment of the situation and the sweeping list of conditions coming from Tehran.

Vice President JD Vance recently argued that Iran is under severe economic pressure and wants the conflict to end, while Trump has repeatedly pointed to progress in discussions involving the strait.

Esper acknowledged that Iran is facing significant domestic economic challenges, but said those pressures have not translated into a weaker negotiating posture.

“It’s true that they are struggling economically,” he said. “They’re in the worst crisis they faced as a regime in 47-plus years.”

At the same time, Esper argued that Iran’s military leadership remains in control and is driving decision-making.

“With the military in charge and at the same time the economy being weakened, I’ve argued that we should really pursue an economic blockade of the country,” he said.

Esper also called for a broader international effort involving U.S. allies in Europe and Asia to increase economic pressure on Tehran.

Regional Attacks Fuel Concerns About Escalation

Esper pointed to recent attacks across the region as evidence that Iran is attempting to expand the conflict.

“We know that the Houthis just this morning attacked a Saudi refinery on the Red Sea,” he said. “Yesterday, Iran attacked a UAE ship.”

The comments follow reports that Yemen’s Iran-backed Houthi movement claimed responsibility for a drone strike on Saudi Arabia’s Jazan refinery. Separately, the United Arab Emirates accused Iran of attacking a vessel linked to its state oil company in the Strait of Hormuz.

The incidents have raised fresh concerns about disruptions to global energy supplies and the possibility of a broader regional confrontation..

What Happens Next

Attention is now focused on whether Iran and Oman finalize their shipping agreement and whether Tehran’s demands leave room for a broader understanding with Washington.

The outcome could help determine when, or whether, commercial traffic through the Strait of Hormuz returns to normal levels.

Any eventual agreement could carry significance beyond the immediate conflict, with analysts arguing that a deal granting Iran a formal role in managing traffic through the strait would strengthen Tehran’s regional influence.

Whether that occurs may become clearer as negotiations over one of the world’s most vital waterways continue in the days ahead.