Iran stood by its conditions for reopening the Strait of Hormuz on Sunday after U.S. President Donald Trump rejected a proposal from Tehran to end hostilities and restore shipping through the strategic waterway, leaving diplomacy between Washington and Tehran at an impasse.

Iranian Foreign Minister Abbas Araghchi said Tehran remained committed to diplomacy but would not abandon what it considers its rights or agree to reopen the strait without the conditions it has set.

“Our conditions are clear, and any move toward reopening the Strait of Hormuz is contingent upon these conditions being fulfilled. We will not back down from them,” Araghchi said, according to Iran’s state broadcaster IRIB.

“We have never closed the door to diplomacy or negotiations, but at the same time, we have never backed down from our rights.”

The proposal, presented by Iran at the United Nations General Assembly in New York and conveyed to Washington through Qatari mediators, calls for an end to fighting across the Middle East, including in Lebanon, and a return to the terms of a ceasefire arrangement that collapsed during the conflict over Hormuz.

Under the proposal, the United States would lift its naval blockade of Iranian ports, ease sanctions on Iran’s oil exports and allow access to frozen Iranian assets. In return, Tehran says it could reopen the Strait of Hormuz and restore normal maritime traffic within seven days.

Araghchi said Iran had sent Washington a concrete seven-day plan through Qatar.

“If the necessary conditions are met, the strait can be reopened, and normal maritime passage restored within seven days,” he told reporters at the United Nations. “The choice now rests with the United States.”

Trump rejects proposal but expects more talks

Trump said Saturday that he had rejected the Iranian offer, arguing that Tehran was seeking an agreement because it was under growing economic pressure.

“They want to make a deal where they open the Strait immediately because they’re losing so badly,” Trump told reporters.

On Sunday, however, Trump said further discussions with Iran were expected during the coming week.

“They want to make a deal, but it is not the deal that I want to make,” Trump said in a phone conversation with Axios, according to the U.S. news outlet. He said the proposal was something Washington might have accepted a year earlier but that Iran had “overplayed their hand.”

Two regional sources told Axios that a new round of indirect talks could begin as early as Monday.

U.S. and Iranian representatives held their first negotiations in months on the sidelines of the U.N. General Assembly in New York, with Trump’s chief negotiator, Steve Witkoff, saying the talks took place through intermediaries.

The possibility of further negotiations suggests that Trump’s rejection of the proposal has not necessarily closed the diplomatic channel.

U.S. Ambassador to the United Nations Mike Waltz said Washington rejected the Iranian proposal because Tehran had demanded that major concessions be made before negotiations could resume.

“This was, I think, a pretty cynical attempt to put something on the table that they knew was unacceptable,” Waltz told NBC News.

He said Iran was seeking the lifting of the blockade and international sanctions as well as access to billions of dollars in frozen assets simply to return to negotiations.

“They were asking for everything up front,” Waltz said in another interview with CNN.

Waltz also said Trump lacked confidence that Tehran was prepared to negotiate seriously over its nuclear program after previous diplomatic efforts had failed.

Tehran says Washington has not formally responded

Despite Trump’s public rejection, Araghchi said Iran had not yet received an official response through the mediators handling the negotiations.

“We saw the first reaction from the U.S. president, but so far, nothing has been conveyed to us by the mediators,” he said.

“We are waiting for the mediators to convey the definitive positions to us, and we will make a decision based on them.”

Iranian President Masoud Pezeshkian also told CBS that Tehran remained open to talks over its nuclear program and other issues but would not accept what he described as pressure or coercion.

“Iran is not seeking war, but will defend itself against pressure, threats and attacks,” Pezeshkian said, adding that Tehran had already agreed that it should not develop nuclear weapons.

Iranian officials have nevertheless said they will not compromise on what they consider their rights, including uranium enrichment or the removal of highly enriched uranium from the country.

Hormuz at center of seven-month war

The Strait of Hormuz has become the central flashpoint in a conflict that began on Feb. 28 with U.S. and Israeli attacks on Iran.

Before the war, shipping through the narrow waterway was largely uninterrupted. Roughly one-fifth of global oil demand normally passes through the strait, which is also a major route for liquefied natural gas and fertilizer shipments.

Iran subsequently brought maritime traffic through the strait close to a standstill through threats and attacks on vessels, while requiring ships to obtain authorization before passing through the waterway. Tehran has cited security and sovereignty concerns for the restrictions.

The disruption sent oil and gas prices sharply higher and strained the global economy.

The United States responded by imposing a naval blockade on Iranian ports, seeking to cut Tehran off from energy revenues and increase economic pressure on the country.

Iran’s Revolutionary Guards said on Sunday that they had seized a U.S. submarine drone in the Strait of Hormuz, accusing it of being used for espionage. The Guards said the underwater vehicle was being held by specialists who were working to recover its data.

Iranian Revolutionary Guards spokesman Hossein Mohebi was quoted by Tasnim news agency as saying Tehran would not stop retaliatory actions against the United States until its seven conditions were met.

Mohebi had previously told AFP that ending hostilities in Yemen was also among Iran’s demands.

Gulf states warn against using waterways as leverage

The crisis has also drawn growing concern from Gulf states whose economies depend heavily on the free movement of energy through regional waterways.

Saudi Foreign Minister Faisal bin Farhan told the United Nations that the international community had failed to fulfill its responsibility to keep the Strait of Hormuz and Bab al-Mandab open.

“The Kingdom rejects any party’s use of these vital passages as a tool for pressure, threat, or harm to the interests of states,” he said, stressing their importance to global energy security.

Iran has also engaged with Saudi Arabia over the future of shipping through Hormuz, underscoring the wider regional stakes of the conflict.

The war has disrupted oil flows through one of the world's most important shipping lanes and increased pressure on the global economy.

Diplomacy remains possible

The latest standoff follows repeated attempts to revive negotiations after earlier diplomatic efforts failed to produce a lasting settlement.

The fighting has alternated between pauses and renewed strikes, killing thousands and damaging Iran’s conventional military capabilities and an economy already under severe pressure.

Iran and its allies have also expanded the conflict across the region. Tehran has launched drones and missiles at U.S. allies in the Gulf, while its Houthi allies in Yemen have targeted Saudi interests.

Saudi Arabia’s Saudi-led coalition said early Saturday that it had intercepted two ballistic missiles and two drones launched by the Houthis toward the kingdom.

Against that backdrop, Tehran continues to argue that diplomacy is the only way out of the crisis, while Washington insists that any agreement must address its concerns over Iran’s nuclear program and regional military activities.

Araghchi said the seven-day proposal could provide a framework for reopening Hormuz and then moving to broader negotiations on issues agreed by both sides.

For now, however, the two governments remain divided over which side must make the first move.