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President Trump signaled he’s prepared to let economic pressure on Iran build rather than launch fresh military strikes to force a reopening of the Strait of Hormuz, even as the Islamic Republic reiterated that the conditions still aren’t in place to allow free passage through the key waterway.

“We are just watching Iran with its huge inflation and the fact they have no money,” Trump told Axios in an interview on Sunday, saying that a US naval blockade of the country was deepening its financial woes. “We are low-keying it.”

The president’s comments mark a shift from his repeated threats to escalate the bombing campaign against Iran and come amid lingering talks between Tehran and Oman to reopen Hormuz. Iran has said it’s nearing a deal, while laying out a list of demands for Washington to meet before shipping can resume — including the lifting of sanctions.

“As long as hostile actions continue, the conditions for ensuring the safety of this waterway are not in place,” Iran’s foreign ministry spokesman Esmail Baghaei told reporters on Monday. “Its reopening is contingent on the US ceasing its illegal actions, lifting the siege and compensating for damages.”

Brent crude rose 1% on Monday to over $84 a barrel, extending a rally of more than 5% over the previous three sessions. The contract is still down since the start of the month.

The Islamic Republic’s economy has taken a hammering from the war, with much of its industrial capacity destroyed, crude exports severely curtailed by a US blockade and central bank data showing year-on-year inflation recently reaching 77%.

The currency, meanwhile, has fallen more than 10% from its prewar level, adding to the economic pressure on Iranians. A depreciation of the rial sparked violent nationwide protests that peaked early this year, leading to a crackdown by authorities that left thousands dead. There have been no signs of the anti-government demonstrations resuming.

Iran reemphasized its determination to continue wielding control over Hormuz in the face of US opposition by naming hard-line former Islamic Revolutionary Guard Corps commander Mohsen Rezaee to its top security post over the weekend. An advocate for full Iranian control over the waterway, he served as military adviser to Iranian Supreme Leader Mojtaba Khamenei and will now head the Supreme National Security Council, which coordinates decisions on the war and negotiations to end it.

Rezaee replaces Mohammad Bagher Zolghadr, a fellow hard-liner who accepted a new position as political adviser to the supreme leader. The appointments were reported by the state-run Islamic Republic News Agency late Sunday.

Over the weekend, Iranian Foreign Minister Abbas Araghchi said a pact with Oman to establish a shipping route through the strait was “very close,” without providing details on the substance. He ruled out direct talks with the US for now, but said the two sides are exchanging messages through intermediaries.

The Strait of Hormuz, through which one-fifth of the world’s oil and liquefied natural gas transited before the war, has become a key sticking point in the negotiations to bring a lasting end to the fighting that began when the US and Israel staged airstrikes on Iran on Feb. 28. Trump has demanded free passage for months.

Tehran’s demands for a full reopening include the US lifting its naval blockade on Iranian ports, the release of frozen assets and compensation for war damage. It has also called for a permanent end to attacks on groups it backs in Lebanon, Iraq, Yemen and Gaza. It’s unclear how strictly Iran will stick to the list of conditions.

Some of the demands will be difficult for the US to meet alone. In Gaza, a proposal by US-backed mediators to disarm Iran-backed Hamas and push Israeli army out of the Palestinian enclave was rejected by Israel’s Prime Minister Benjamin Netanyahu on Sunday.

In Yemen, clashes between the Iran-backed Houthi rebels and forces from the internationally recognized government supported by neighboring Saudi Arabia, have escalated. The Houthis claimed to have struck Saudi Aramco’s Jazan refinery on Sunday, while Saudi authorities reported a fire that was quickly extinguished, with no injuries.

The incident would mark at least the second blaze at the 400,000 barrel-a-day complex in a month. Satellite images in late July showed a tank fire following another claimed Houthi attack.

Sykes writes for Bloomberg.