Iran and Oman swap proposals to manage Strait of Hormuz: What we know
Get the Geopolitics newsletter
Daily geopolitics — wars, elections, sanctions, the diplomatic moves that move markets. Free.
- Iran rejected Oman's proposal for a 50-50 split of Strait of Hormuz oversight and submitted a counterproposal placing one route entirely in Iranian territorial waters with partial control over a second, according to Deputy Foreign Minister Kazem Gharibabadi, who warned the strait will remain closed if Muscat refuses.
- Oman modeled its rejected proposal on the Strait of Malacca arrangement, under which Indonesia, Malaysia, and Singapore raise roughly $70m annually through voluntary shipping fees — a fraction of Tehran's reported demand of $1m per vessel as a "service fee."
- Gharibabadi said pre-war arrangements allowing ships to transit without paying any toll cannot return, and stated that any fees would fund reconstruction from US-Israeli attacks that began in late February.
- A June 17 US-Iran memorandum of understanding was supposed to reopen the strait toll-free for 60 days, but vague wording over control and routing reignited fighting and left the diplomatic dispute unresolved.
- Oman is now weighing a third proposal with three maritime routes — one in Iranian waters, one international, one in Omani waters — and Al Jazeera reported from Tehran that Iran is showing "some flexibility."
- GCC foreign ministers met Tuesday in a show of regional backing for Oman's position, while outstanding disputes include ship trajectory direction, fee levels, and mine clearance operations in the strait.
Why it matters: The strait carries roughly one-fifth of the world's oil and LNG shipments, so the standoff over tolls and control directly affects global energy supply routes. Tehran's reported $1m-per-ship demand is orders of magnitude larger than the ~$70m the Malacca voluntary-fee model generates annually across three countries, meaning whatever arrangement emerges could impose unprecedented transit costs on shippers or leave the waterway closed indefinitely.
