Iran Seeks Operational Control Over Inbound Strait of Hormuz Traffic in Draft Deal With Oman, Keeping Global Commodity Flows on Edge

Iran’s push to control inbound traffic through the Strait of Hormuz under a proposed deal with Oman keeps one of the world’s most critical energy and fertilizer chokepoints only partially open, sustaining elevated freight, insurance and commodity price risks. With the waterway largely blocked since late February amid the U.S.-Israel–Iran conflict, any reopening that preserves Iranian intervention rights is unlikely to restore pre-war trading conditions in the near term.

While talks have advanced in recent days toward an interim reopening framework, market participants face continuing uncertainty over rules of passage, security of vessels and the timing of a meaningful normalization in oil, LNG and fertilizer flows out of the Gulf.

Introduction

Iran and Oman are negotiating a temporary reopening plan for the Strait of Hormuz that would give Tehran operational control over vessels entering the Gulf and shared oversight over outbound traffic via a designated corridor between Iranian and Omani waters, according to regional officials and negotiators. Oman would issue final outbound clearances after notifying Iran, which would retain the right to intervene when it deems necessary.

The talks come after months of military escalation that has seen Iranian attacks and counter-strikes by the U.S. and Israel largely shut the strait since the war began on February 28, severely disrupting flows of crude oil, refined products, LNG and other cargoes. Despite a June memorandum of understanding intended to reopen the waterway, disagreements over control and implementation have prevented a sustained resumption of normal traffic.

Immediate Market Impact

The prospect of a narrowly framed reopening that formalizes Iran’s gatekeeping role over inbound traffic, and preserves intervention rights outbound, implies only a partial easing of logistics constraints for commodity markets. Oil prices, which have repeatedly spiked above $100 per barrel since the conflict began and remain around 20% above pre-war levels, are likely to stay supported by persistent supply and route risk premia.

War-risk insurance premiums for tankers and bulkers transiting the region are expected to remain elevated as long as shipping remains exposed to political and military decisions in Tehran and Washington, and while the central lanes of the strait are still affected by mines and sporadic security incidents. Freight volatility for VLCCs and product tankers on Gulf–Asia and Gulf–Europe routes is likely to persist, with charterers demanding flexibility and diversions where possible.

Supply Chain Disruptions

Since late February, the effective closure of the Strait of Hormuz has constrained exports from key Gulf producers, forcing some crude and LNG to be rerouted via alternative pipelines or held in storage, and sharply reducing spot availability. Petrochemical and fertilizer exports from Gulf states have also been disrupted, affecting ammonia, urea and other nitrogen products crucial to global agriculture.

The draft Iran–Oman arrangement, by limiting traffic to managed inbound lanes and a controlled outbound corridor, would likely cap throughput below pre-war norms for an extended period. Clearing mines in the central strait and rebuilding confidence among operators and insurers could take months even under a best-case political scenario. Port congestion risks remain high at Gulf load terminals as cargoes bunch around narrow shipping windows and as some shippers delay sailings awaiting clearer rules.

Commodities Potentially Affected

• Crude oil and condensate – Around one-fifth of the world’s crude exports normally transits Hormuz; constrained outbound capacity and security risks underpin higher flat prices and volatility, especially for Middle Eastern grades.
• Refined oil products – Gasoline, diesel and jet fuel exports from major Gulf refineries face ongoing schedule disruptions and longer voyages, influencing crack spreads and regional availability.
• LNG – Qatar and other regional suppliers relying on Hormuz face bottlenecks, supporting spot LNG prices in Europe and Asia and driving buyers to seek alternative Atlantic and Pacific sources.
• Fertilizers (ammonia, urea, phosphates) – Gulf producers shipping via Hormuz confront higher freight, insurance and delay risks; tightness in nitrogen supply can lift global benchmark prices and import costs for key agricultural economies.
• Containerized food and feed ingredients – Disruptions to liner schedules through the Gulf affect movements of sugar, rice, dairy, edible oils and feedstuffs into and out of the region, complicating procurement for regional food processors.

Regional Trade Implications

Middle Eastern producers that can bypass Hormuz via existing pipelines to Red Sea or Mediterranean outlets stand to gain relative logistics advantages. Saudi Arabia and the UAE, for example, can partially re-route crude exports, though capacity is limited and cannot fully substitute for lost Hormuz transit.

Import-dependent economies in South and East Asia—particularly India, Pakistan, and some ASEAN states—remain the most exposed to continued constraints, given their reliance on Gulf-origin oil, gas and fertilizers. European buyers also face tighter competition for alternative barrels and cargoes, especially if LNG and oil flows remain below normal levels through the strait.

Conversely, non-Gulf exporters of oil, LNG and fertilizers—including the U.S., West Africa, Russia and North African suppliers—may benefit from improved netbacks as buyers diversify away from Hormuz-dependent routes. However, elevated freight and insurance costs on many long-haul routes will partly offset these gains.

Market Outlook

In the short term, markets are likely to treat the Iran–Oman talks as a modest de-escalation but not a resolution. Traders will focus on concrete implementation details: how inbound control by Iran is exercised in practice, the legal status of the outbound corridor, mine-clearance progress and whether attacks on commercial shipping cease.

Price volatility across crude, LNG and fertilizers will remain elevated while the risk of renewed military strikes or unilateral closures persists. Any incident involving a tanker or bulk carrier could quickly reverse sentiment and trigger another spike in war-risk premia and freight rates. Conversely, confirmation of a stable, rules-based transit regime with international monitoring could gradually compress risk spreads, though full normalization to pre-war pricing structures appears distant.

CMB Market Insight

The emerging framework for a partial reopening of the Strait of Hormuz underscores that control over maritime chokepoints has become a central lever in the current Middle East conflict, with direct implications for global energy and agricultural input security. Even if Oman-brokered arrangements restore some traffic, Tehran’s continued operational role and the unresolved political backdrop mean that Hormuz will remain a structurally higher-risk corridor for the foreseeable future.

Commodity traders, importers and food industry buyers should plan for prolonged route risk, higher baseline freight and insurance costs, and periodic supply interruptions from Gulf-origin oil, gas and fertilizers. Strategic diversification of sourcing, increased use of longer-term contracts with logistics flexibility, and contingency stocks in key importing regions will be critical to managing price and availability shocks while the geopolitical contest over Hormuz plays out.