Iran and Oman swap proposals to manage Strait of Hormuz

Hind Al Soulia - Riyadh - DUBAI — Iran has rejected a proposal from Oman for the joint oversight of the strategic Strait of Hormuz and has, instead, made a proposal of its own as both sides continue to pore over the terms of what a final agreement could look like.

Oman, which sits opposite Iran across the strait, suggested a temporary plan to establish even lanes of control, but Tehran demanded Tuesday that it take the lion’s share of the waterway critical to the flow of the world’s oil supply, one of its top diplomats said.

Iran’s Deputy Foreign Minister Kazem Gharibabadi said in a state broadcast on Tuesday that Oman’s proposal had not sufficiently addressed Tehran’s concerns about control of the strait.

The Iranian move jeopardized hopes that Tehran and Washington would quickly resume negotiations to end the war. The narrow strait has been at the center of the conflict between the United States and Iran since late February, when US-Israeli attacks began on Iran.

Before the war, about one-fifth of the world’s oil and liquefied natural gas (LNG) supplies were shipped from Gulf producers via this route. Shortly after the war began, Tehran closed the strait, triggering global supply challenges. The US later imposed its own, corresponding blockade on Iranian ports.

Iran has said it wants to manage the strait alongside Oman, which controls the opposite shore, and charge service fees to ships that use it. Washington wants to return to the status quo prior to the war, when ships were able to pass freely with no payments, and says charging mandatory fees would be illegal.

A US official on Tuesday ‌again rejected the idea of tolls or fees for ships transiting the strait, reiterating that it is an international waterway that should be free of Iranian control or restrictions. The official told Reuters that the deal under discussion would not include any tolls or fees.

Under the Omani proposal, Iran would not exercise sole control and fees would be voluntary, the Gulf source and ​a Western diplomat briefed on the matter told Reuters.

Gharibabadi revealed that Muscat had suggested a joint regional mechanism that would see both countries control the strait in a 50-50 split. The proposal would see Iran control transit lanes on its side of the strait, while Oman would control lanes running along its coast.

“Oman proposed to us the creation of a route in the Strait of Hormuz, with 50 percent of it located in our territorial waters and 50 percent in Omani territorial waters. The route for ships to pass through the Strait of Hormuz could involve entering through our waters and exiting through Omani territorial waters,” Gharibabadi told state TV.

Additionally, the proposal suggested “voluntary fees” from shipping vessels that would go to both countries.

The system would be analogous to one in place on Asia's Strait of Malacca, where Indonesia, Malaysia and Singapore ask ships to pay voluntary contributions to fund navigation, environmental protection and search-and-rescue operations.

The Western diplomat compared it to ‌a voluntary carbon ⁠tax for flights, where anyone buying a plane ticket can choose to tick a box if they want to pay to offset their emissions.

Oman’s proposal also appears to be backed by regional countries. Gulf Cooperation Council foreign ministers met via video call on Tuesday to discuss the latest developments in the conflict, including ways to intensify cooperation on issues related to freedom and safety of vessels through the waterway, a statement from the Qatari Foreign Ministry said.

But Gharibabadi said Iran ultimately rejected the proposal based on its own national security concerns.

He said Tehran had proposed ​to Oman that Iran manage one-way shipping through its side of the strait and Muscat manage part but not all of the opposite direction.

“Our proposal is for one route to lie entirely within the territorial waters of the Islamic Republic of Iran, with part of the other route also passing through Iranian territorial waters, so that Iran can effectively exercise oversight over both inbound and outbound traffic,” Gharibabadi said.

Gharibabadi warned that the strait will remain closed if Oman rejects the plan. He also warned that the Strait of Hormuz could not return to pre-war arrangements when ships passed without paying any form of toll.

Iran's joint military command again rejected a plan put forward by Trump for damages to vessels to be paid from frozen Iranian assets, state media reported. It said that any country or company that accepted such payments would be denied passage through the Strait of Hormuz by Iran's armed forces.

Adding to the challenges for shipping in the region, the Iran-aligned Houthis in ​Yemen opened a new front against the US and its ​allies on July 20, when they declared a blockade ⁠of Saudi ports on the Red Sea.