Source: Fortune
Summary
Iran and Oman are close to a deal to reopen the Strait of Hormuz, with Iran gaining control over inbound traffic. The agreement would be a significant geopolitical win for Tehran. The US and other countries have insisted on total freedom of navigation, but Iran’s ability to threaten ships has kept the strait effectively closed. The deal would allow the US and Iran to restart negotiations for a longer-term ceasefire. Iran has warned that Hormuz won’t fully reopen until the US fulfills its commitments, including lifting its naval blockade and unfreezing Iranian assets.
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The numbers tell one story. Iran’s control over the Strait of Hormuz is a reality, despite US insistence on total freedom of navigation. The emerging deal recognizes Iran’s authority, with Iran demanding 5%-7% of the price of cargoes from ships using the strait. Oman has floated a fee of around 3%. The US may have to accept Iranian control without explicitly acknowledging it, according to Gregory Brew, an Iran expert.
The strategy enters a familiar phase. Iran’s leverage over oil markets will diminish over time as Gulf officials scramble to add pipeline capacity to bypass the strait. But in the near term, the US may have to look the other way as Tehran cements its grip.
Author: Evan Null
