Strait of Hormuz Deal Raises Hope—and a New Iran Risk

Could the long-awaited Hormuz breakthrough finally be close? Iran and Oman are finalizing a draft agreement that could reopen the world’s most important oil chokepoint after more than five months of disruption caused by the Iran war. But the proposed Strait of Hormuz Deal comes with a potentially explosive price: Tehran would gain oversight of ships entering the Persian Gulf.

The draft would establish two separate shipping corridors. Inbound vessels would travel along a route close to Iran and coordinate with Tehran. Outbound ships would use a lane near Oman and coordinate with authorities in Muscat.

Iran would not be permitted to impose mandatory tolls or service charges. However, the proposal may still allow voluntary payments connected to security, navigation, search-and-rescue operations and other maritime services.

The main points have reportedly been shared with the United States, Gulf governments and Iran’s senior leadership. Final approval, however, is still missing.

Hormuz Crisis Shook the Global Economy

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.

Before the war, approximately 20.9 million barrels of oil and petroleum products passed through the waterway every day—equivalent to about 20 percent of global petroleum consumption and roughly one-quarter of all seaborne oil trade. More than 20 percent of global liquefied-natural-gas trade also traveled through Hormuz, primarily from Qatar.

Attacks on ships, mines, military confrontations and Iranian restrictions have sharply reduced traffic since the war began. Gulf exports remain approximately 40 percent below their prewar level, while shipping and insurance costs have surged. A successful agreement could therefore increase oil and gas shipments, push energy prices lower and ease pressure on the global economy.

But markets remain cautious. Oil prices rose Thursday as traders worried that the latest diplomatic effort could fail like previous agreements. Brent crude traded at roughly $80 per barrel.

Iran Still Demands U.S. Concessions

Iranian Foreign Ministry spokesman Esmail Baghaei confirmed that Tehran and Oman had agreed on the basic coordinates of a safe shipping route and were completing the outline. Yet Deputy Foreign Minister Kazem Gharibabadi warned that an agreement with Oman would not automatically reopen the strait. Washington must first satisfy additional Iranian conditions.

The most important demand is likely an end to the American blockade of Iranian ports. The blockade has restricted Tehran’s oil exports and intensified pressure on an economy already weakened by sanctions and war.

Oman and Qatar are also reportedly pushing for sanctions waivers that would allow Iran to sell more oil. Such concessions could make an agreement more durable—but could also delay its announcement.

Would the Deal Hand Iran Control?

The greatest concern among Gulf governments is that the proposed arrangement could formalize Iranian influence over a waterway that is essential to their economic survival. Ships entering the Gulf would effectively have to coordinate with Tehran. Critics fear that this could give Iran veto power over energy exports even without an official toll system.

“The question is whether the Trump administration understands that this agreement tacitly hands Iran control of traffic,” Atlantic Council energy expert Ellen Wald told the Wall Street Journal. The United States has repeatedly insisted that it will not recognize Iranian sovereignty or exclusive authority over the international strait.

The global shipping industry has also raised serious objections. Shipping sources warned that coordination or payments involving Iranian authorities could violate U.S. sanctions and invalidate insurance coverage. They described parts of the proposed system as commercially and legally unworkable.

Hardliners Could Still Destroy the Agreement

The draft still requires approval from Iran’s highest political and military leadership.

That includes figures within the Islamic Revolutionary Guard Corps, which enforces Iran’s position in the strait and has repeatedly demonstrated its willingness to attack or detain commercial vessels. A previous U.S.-Iran memorandum collapsed amid conflicting interpretations, renewed ship attacks and fresh military exchanges. The earlier agreement had also promised 60 days of free passage while broader negotiations continued.

The latest Strait of Hormuz Deal would reportedly also last only 60 days. That temporary framework could make compromise easier while giving both sides time to negotiate unresolved disputes.

Trump Needs Falling Oil Prices

President Donald Trump paused another major round of American airstrikes to create space for negotiations.

A Hormuz breakthrough would offer him a badly needed political victory. Gasoline prices remain far above their prewar level, while the Iran conflict has become increasingly unpopular with American voters. Lower oil prices could ease inflation and provide relief to households only three months before the U.S. midterm elections.

Middle East expert Sanam Vakil said both Washington and Tehran have strong incentives to gain time and preserve the fragile peace.

But even a successful agreement would expose the central contradiction of Trump’s war: It would solve a crisis that did not exist before the fighting began. The original justification for the campaign—preventing Iran from developing a nuclear weapon—has now become secondary to negotiations over shipping routes, sanctions and control of the Strait of Hormuz.

Expert Expects Oil Glut if Deals Goes Through

Oil expert Andrew Lipow said markets have already begun pricing in a possible breakthrough. “The oil market has been selling off over the past week in anticipation of an agreement between Oman and Iran that would lead to the reopening of the Strait of Hormuz,” he told America Report. If the deal is finalized, Lipow expects the decline to continue, with Brent crude potentially falling to around $75 per barrel.

A reopening could also trigger a rush of additional supply. Lipow expects Middle Eastern producers to load and sell as much oil as possible to recover revenues lost during months of disruption. He said the United Arab Emirates could add further pressure to prices if it leaves OPEC and is no longer bound by a production quota, potentially raising output to well above four million barrels per day.