Iran and Oman are reportedly finalizing a new navigation agreement for the Strait of Hormuz, with fresh details emerging that could reshape global energy transport.
The Iranian FARS news agency reported on Thursday that the country's parliament is reviewing the deal. Under the proposed terms, US and Israeli vessels would be barred from transiting the Strait of Hormuz, and nations that have "caused harm to Iran" would also be denied passage permits.
Following the news, market concerns over energy supply risks escalated sharply. Late in Thursday's US trading session, international crude oil futures saw significant gains. US WTI crude briefly surpassed $78 per barrel, rising nearly 4% intraday, while Brent crude approached $83 per barrel, surging over 4%.
Earlier on Thursday, Reuters reported, citing multiple industry sources, that the proposed navigation plan between Iran and Oman is operationally unfeasible. Challenges include channel capacity, international shipping regulations, and obstacles related to insurance and legal liability.
Central Channel to Replace Dual Lanes, Iran to Take Control of Entry
Details disclosed by FARS indicate that the new agreement would not only revise vessel entry rules but also completely overhaul the existing navigation system in the Strait of Hormuz.
According to informed sources, the current northern and southern lanes, located off the coasts of Iran and Oman respectively, would be entirely eliminated. All vessels would instead be required to use a central corridor. Under this plan, Iran would manage the entry point of the central channel, while exit management would be jointly handled by Iran and Oman.
Additionally, the agreement stipulates that US and Israeli ships would be banned from the strait, and countries deemed to have "caused harm to Iran" would be denied navigation permits.
If implemented, this would replace the decades-old two-way Traffic Separation Scheme with a new central navigation model, significantly enhancing Iran's control over vessels entering the strait.
Industry Sources: Single Central Channel Cannot Handle Current Traffic, International Rules Pose Hurdles
However, the shipping industry widely doubts the plan's operability.
Citing multiple shipping, insurance, and maritime legal experts, Reuters reported that the Strait of Hormuz currently handles about one-fifth of global seaborne oil transport. The existing two-way TSS has been designed for years to accommodate the safe passage of large oil tankers in both directions.
Industry insiders argue that abolishing the current northern and southern lanes in favor of a single central channel would first face a capacity bottleneck. A single lane would struggle to manage the massive volume of two-way traffic, leading to severe congestion.
Furthermore, the current navigation system, long adopted by international shipping organizations, involves international safety standards that cannot be unilaterally altered by Iran and Oman. Differentiating vessel access based on flag state would introduce significant uncertainty in commercial operations, insurance underwriting, and international maritime legal liability.
Reuters quoted an industry insider who stated that from a shipping operations perspective, the plan is not viable.
Nevertheless, analysts note that even if the plan cannot be fully implemented, the policy signals from the agreement alone are enough to heighten market concerns over Strait of Hormuz transit risks, potentially adding a risk premium to international oil prices.
Iran Says Negotiations Limited to Iran and Oman, Aiming for a New Navigation Model in 60 Years
Before FARS disclosed these details, China's CCTV reported on Thursday, citing Iranian officials, that after more than a month of negotiations, Iran and Oman are close to finalizing a new shipping arrangement for the Strait of Hormuz.
According to CCTV, Goodarzi, a spokesperson for the Iranian parliament's presiding committee, stated that the new agreement aims to adjust shipping routes in the strait, with negotiations conducted solely between Iran and Oman, excluding the United States.
Iranian Deputy Foreign Minister Gharibabadi previously noted that the agreement on commercial vessel transit through the Strait of Hormuz is nearly finalized. Under Iran's vision, both the northern lane within Iranian territorial waters and the southern lane through Omani waters would be closed, establishing a new navigation model unlike any seen in the past 60 years.
Gharibabadi also denied that Iran is holding talks with the US but said Iran has received messages from Washington indicating a willingness to resume commitments under a previously signed memorandum of understanding.
Pakistan Hopes Deal Will Facilitate US-Iran Technical Dialogue
Meanwhile, regional diplomatic efforts continue.
According to CCTV, on August 6, Pakistani Foreign Ministry spokesperson Andrabi expressed hope that the Strait of Hormuz agreement could create conditions for continued US-Iran dialogue and promote the resumption of technical-level negotiations.
Andrabi stated that Pakistan will maintain communication with relevant countries on the Strait of Hormuz issue and the Middle East situation, supporting diplomatic dialogue to ease regional tensions.
The new Strait of Hormuz agreement remains in its final stages, with significant uncertainty over its implementation, international acceptance, and ultimate feasibility. However, as more details emerge, this critical global energy transport corridor is once again becoming a major risk factor influencing international oil prices and global shipping markets.
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