The Strait truth: Why a Hormuz deal is harder than it looks

“Hopes have risen that US and Iranian officials can agree an extended deal that would see the Strait of Hormuz reopen to unrestricted traffic. Three months of blockage in the Strait has wrought havoc on energy flows and global supply chains and constituted the biggest supply shock in decades, possibly ever. International stereotypes of the Gulf States as producers of oil and gas and little else have been reshaped by the recognition of their centrality in every day commodities from phosphates and aluminum to helium and sulphur. As prewar stocks are drawn down, governments and companies are warning that the delayed impact of the economic disruption is about to hit hard if passage through the Strait is not restored soon. Difficulties on both the US and Iranian sides mean that any agreement will be vulnerable to sudden reversal or bumps along the way. Deep domestic divisions both in Washington, D.C. and within the Iranian leadership mean that internal politics could still get in the way of an agreement that satisfies both parties. Israel remains a wild card that could also undermine a deal especially as Benjamin Netanyahu begins to prepare for the election season. Moreover, the cavalier nature of US decision-making during the two previous rounds of US-Iran negotiation, in May-June 2025 and February 2026, means that there is a deficit of trust on the Iranian side which will not easily be regained absent a lasting and durable settlement. While Iranian officials have mocked President Donald Trump’s habit of ‘negotiating with himself’ over the course of the war which began on February 28, they too face a challenge of acting consistently over the way the Strait of Hormuz eventually reopens to maritime traffic. Just as Trump’s statements have occasionally been contradictory and at odds with each other over the prospects and content of a deal, so too have Iranian pronouncements on Hormuz. This has added to the frustration both sides feel toward the other and has caused confusion to analysts and industry experts who need clarity to be able to plan and develop next steps. For shipping and insurance companies, in the Gulf States and around the world, predictability in security will be essential prerequisites to addressing the surging risk assessments that amounted to the de facto closure of the Strait in the opening days of the war. Much of the focus from industry analysts will be on the detail that structures the resumption of shipping through Hormuz. Iranian negotiators have realised that their early talk of imposing tolls on shipping run contrary to decades of customary international law as laid down by the International Court of Justice in the Corfu Channel Case in 1949. This decision, which remains foundational today, determined the legal regime that governs innocent passage through international straits and affirmed the protection of navigational rights even in politically sensitive contexts. However, there is greater leeway in the imposition of charges and fees, such as the service-related charges imposed by Turkiye on ships that pass through the Bosphorus and Dardanelles straits that connect the Black Sea and the Mediterranean. It is these charges – for issues such as environmental and health factors or search-and-rescue services – which Iranian officials have raised in recent weeks and have suggested might enjoy the support of Oman, the other coastal state bordering Hormuz, as well. It may be that such commentary is an Iranian attempt to spread misinformation or sow discord between Muscat and its Gulf neighbours, but it is the case that any decision by Tehran to impose service-related charges will be harder to challenge than the tolls initially proposed. It is for this reason that the shipping and insurance industries, to say nothing of governments across the world, will watch closely for the terms of the resumption of passage, and for whether any charges are levied unilaterally by Iran alone. The fact that, pre-war, the shipping channels ran through Omani waters in the Strait of Hormuz, and only briefly entered Iranian waters on their way into and out of the Gulf, strengthens Oman’s position considerably. The other key aspect of restoring innocent passage will be the speed with which transits resume and what takes priority. Around 1500 vessels have been stuck in the Gulf for nearly three months on oil tankers, LNG carriers, and container and dry cargo ships, and they will need to clear the Strait and make their way to intended destinations or home ports. Many of the vessels may have suffered damage from the buildup of marine organisms and algae on their hulls during extended periods of inactivity, which will require extensive cleaning and maintenance before they can return to service. As a result, logistical bottlenecks will likely endure for many months even after ‘normal’ flows begin to resume; the same goes for the restarting of oil and gas facilities where production has been shut-in since early March. Finally, insurance companies will monitor the conditions of reopening in practice, rather than just as words on paper, before making any decision on war risk coverage for vessels transiting the Strait. It was the repricing and, in some cases, suspension of war risk premiums and surcharges in early March that was the decisive factor in restricting traffic through Hormuz, rather than any physical blockage by Iran. The ease with which passage was interrupted took analysts by surprise as it upended prior assumptions that Iran would have to physically disrupt shipping by mining activities or attacking vessels, as they had done during the Tanker War phase of the Iran-Iraq War in the 1980s. Back then, the international community belatedly came together in Operation Earnest Will to establish the largest naval convoy operation since the Second World War to protect shipping, and, in so doing, planted the seeds of the permanent US military presence that continues to this day. It would be ironic if the unintended consequences of the US strikes on Iran in 2026 contributed to the unraveling of the regional order set in motion by those earlier events four decades ago.  The writer is a leading scholar specialising in Gulf politics and international political economy, and a fellow at the Baker Institute and co-director of the Middle East Energy Roundtable.

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