It seems pretty ill-adviced to even consider humouring the demons with their demands. Since it's the demons, they wouldn't honour their promises anyway. If the demons need to ask for favours like that, it means they don't possess enough power to see it done on their own, so their threats sound hollow as well. If the demons have a spy/assassin in the king's castle, getting rid of that infiltrator is the first priority, not agreeing to the demon's demands. After all, even if the king accepted the demand, the assassin could still act against him. Moreover, if he hands over two valuable assets, it means the human side will be made weaker, the demon side stronger, relatively. That would be a direct threat to the king's life, not to mention the lives of everybody else as well.
The king would be need to be a real coward and waste of skin to even think about it.