Iranian Foreign Minister Abbas Araghchi said Sunday that Tehran is prepared for a renewed conflict with the United States while leaving diplomatic channels open. Speaking after the United Nations General Assembly, Araghchi said Iran was continuing to pursue diplomacy because it did not want to miss an opportunity for peace, even as he warned that Tehran was prepared to face further military confrontation.

The comments came after President Donald Trump rejected an Iranian proposal that would have linked the reopening of the Strait of Hormuz with renewed nuclear negotiations. Trump said Saturday that he had rejected the proposal, while Reuters reported that the Iranian plan sought to reopen the strategic waterway and end the fighting within seven days under specified conditions.

Hormuz Remains Central to the Standoff

The Strait of Hormuz remains one of the most important pressure points in the conflict because of its role in global energy transportation. Iran has maintained that reopening the waterway depends on conditions including an end to U.S. military pressure and the naval blockade, while Washington has rejected the latest Iranian framework.

The latest diplomatic impasse leaves markets facing continued uncertainty over energy flows. Any sustained disruption through Hormuz could keep a geopolitical premium embedded in crude prices, while progress toward reopening the waterway could have the opposite effect by reducing concerns over supply.

Iran Claims Capture of U.S. Underwater Drone

The confrontation also escalated around the strategic waterway after Iran’s Islamic Revolutionary Guard Corps said it had captured a U.S. Remus 600 unmanned underwater vehicle. Iranian state-linked reporting said the vehicle was intercepted through an operation involving intelligence and electronic-warfare capabilities and was transferred to specialists for examination.

The U.S. military disputed the claim. A U.S. Central Command spokesman said the United States retained positive control of its operational drone assets and characterized the Iranian assertion as unfounded. The conflicting accounts mean the circumstances surrounding the reported capture remain disputed.

Military Signals Add to Market Uncertainty

Iranian military officials have continued to signal that the conflict could continue. At the same time, reporting from The Wall Street Journal indicated that Trump had rejected Iran’s latest proposal and privately anticipated renewed bombing after the November midterm elections. That report describes an expectation attributed to U.S. officials rather than a confirmed future military decision.

Trump has separately said he remains interested in reaching an agreement, illustrating the uncertainty surrounding the next stage of the conflict. Recent U.S. statements have combined rejection of Tehran’s current proposal with continued references to a possible future diplomatic settlement.

Oil Markets Remain Highly Sensitive

The geopolitical confrontation has had a significant effect on energy markets. Despite the conflict and restrictions around Hormuz, crude prices declined sharply over the latest week as investors responded to diplomatic discussions between Washington and Tehran. West Texas Intermediate fell 2.3% to $92.41 a barrel, while Brent declined 2.1% to $104.32. WTI remained up nearly 61% year to date, while Brent was more than 71% higher.

The conflicting signals create a difficult environment for energy investors. A diplomatic breakthrough that restores normal shipping through Hormuz could reduce the supply premium in crude, while renewed military escalation could place it back under pressure. The direction of oil prices therefore remains closely tied to developments that extend beyond traditional supply-and-demand fundamentals.

What Investors May Watch Next

The immediate focus will remain on whether Washington and Tehran can reopen a diplomatic channel despite the rejection of Iran’s latest proposal. Developments around the Strait of Hormuz, military activity and the competing claims surrounding the underwater drone could all influence expectations for energy supply and regional stability.

For financial markets, the central variable is whether the conflict moves toward a negotiated framework or another phase of escalation. Oil prices, inflation expectations and interest-rate expectations could all respond quickly to changes in the outlook, making diplomatic statements and developments around Hormuz important market signals in the weeks ahead.