By Tala Ramadan and Steve Holland
DUBAI/WASHINGTON, Aug 10 (Reuters) - U.S. President Donald Trump on Monday demanded Iran pay compensation for the people he said it had killed in wars, attacks and protests, raising the rhetorical stakes with Tehran as hopes faded for an imminent deal to reopen the Strait of Hormuz.
Trump said he was responding to Iran's earlier call for Washington to meet conditions, including recompensing Tehran for the damage caused since the U.S. and Israel launched strikes on its territory more than five months ago.
"I am likewise demanding compensation from Iran, for all of the people that they have killed and gravely wounded with their roadside bombs and many conflicts, for which they are famous," Trump wrote on his Truth Social service.
Oil prices, which had risen earlier on the Iranian comments, extended gains after Trump's post, with Brent crude up 4.25% at 1720 GMT.
TRUMP CITES ATTACK BLAMED ON AL QAEDA, NOT IRAN
Trump's demand had not previously been raised by the U.S. in talks or statements.
The president said it would be part of all future negotiations with the Iranian leadership, and would include calls for payments to the families of hundreds of thousands of protesters whom he said Iran had killed.
Rights groups say the Iranian government has continued to crack down on opponents during the war.
Trump also said Iran should compensate "families of those killed on the USS Cole", a reference to the October 12, 2000, attack on that naval vessel in Yemen which killed 17 U.S. sailors, and has been blamed on al Qaeda, not Iran.
"Also, with respect to the Iran negotiations, Iran should be responsible for the damages and death caused to the people of Lebanon, Syria, Yemen, and Gaza!" Trump wrote in a second post.
Iran had earlier said it was nearing a final pact with Oman defining new shipping lanes between them through the Strait of Hormuz but repeated that the U.S. must meet conditions, including compensation and an end to sanctions and military threats before the key waterway is reopened.
The strait, through which about a fifth of global oil and liquefied natural gas flowed prior to the conflict, has been effectively blocked since the U.S.-Israeli attacks on Iran on February 28, pushing up oil prices and inflation.
Trump, who has said the attacks on Iran were aimed at keeping the Islamic Republic from developing nuclear weapons and degrading its ability to threaten the region, is under pressure to end a war that is deeply unpopular at home ahead of midterm elections in November.
The tit-for-tat U.S. and Iranian calls for compensation were the latest jolt in a rhetorical rollercoaster that has regularly seen Trump threaten imminent attacks on Iran or hail breakthroughs in talks, only for neither to emerge.
Earlier on Monday, Iranian Foreign Ministry spokesman Esmaeil Baghaei said talks with Oman on arrangements for navigation through the strait were "progressing smoothly and constructively", with an agreement reached on a shipping route map, while some technical issues on a joint statement remained unresolved.
He said during a weekly press conference in Tehran that the discussions also covered mechanisms for safe navigation, environmental protection, maritime services and combating crime, adding that such services would normally entail receiving payment in return.
U.S. officials have repeatedly said they would not accept any deal under which Tehran controlled or charged fees for access to the strait.
But months of U.S. military efforts, including a two-week campaign of strikes in July, have not broken Iran's grip on the strait.
Washington and Tehran agreed to a ceasefire in June, but the U.S. reimposed a blockade on Iranian shipping in the Gulf in July, a move that Tehran said violated the truce, which by then had already broken down.
Iran has been striking back with missiles and drones against Washington's allies in the region, while also targeting commercial ships transiting the strait without its permission.
ANOTHER HOUTHI ATTACK REPORTED
Iran's Yemen-based allies, the Houthi rebels, have also targeted ships at another oil chokepoint on the other side of the Arabian Peninsula between the Red Sea and Gulf of Aden.
The Houthis also declared a naval blockade against Saudi Arabia in the Red Sea last month in response to what they said was a Saudi siege on them in Yemen, an allegation denied by Riyadh, which backs Yemen's internationally recognised government.
Fighting has escalated between the Houthis and government forces in Yemen, with the Yemeni military on Monday saying seven people including military personnel and civilians were killed in a Houthi attack on the Red Sea port city of Mocha.
Air defences intercepted and shot down 11 Houthi drones that participated in the attack, the military said.
(Reporting by Nayera Abdullah, Steve Holland, Enas Alashray, Stephanie Kelly. Writing by Sharon Singleton and Andrew Heavens; Editing by Nick Zieminski, Alison Williams, Mark Potter and Cynthia Osterman)