。
The water around us was stagnant.
Literal
Our [attributive-の] surroundings [at-で] water [topic-は] stagnant-[past-state-ていた].
周囲 ('surroundings, circumference, vicinity') is a Sino-Japanese compound. よどむ ('to be stagnant, settle, become murky') is used for still water, stagnant air, or figuratively for stagnation. ていた gives the past ongoing state. A literary descriptive sentence, the kind you'd find in a novel setting a scene.