Iran’s Hormuz Terms Put Oman in a Revenue Bind

Iran is drafting conditions to reopen the Strait of Hormuz, its top security official said Thursday, after mediators asked Tehran to write them down. Ending the regional war is on that list, along with a shipping corridor with Oman.

Oman holds the other shore. The two sides still do not agree on whether money is part of the deal.

Rezaei Puts a Price on Reopening Hormuz

Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, told Al Manar that Tehran had agreed with Oman on a corridor through the strait, with parts of the route in Omani waters and parts in Iranian waters. Ships would use a designated central channel if the United States met Iran’s terms, he said through an interpreter. Reuters reported the interview on August 27.

Rezaei said the United States must take practical steps first. Tasnim, the semi-official Iranian agency, quoted him the same day as saying, “The US must first take practical measures toward fulfilling Iran’s conditions, after which Iran will move to reopen the Strait of Hormuz.” He said that in a meeting with Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani, who was in Tehran on a mediation trip, his first since the war began.

Hossein Mohebbi, spokesman for the Islamic Revolutionary Guard Corps, had already drawn a harder line on Wednesday. If Washington does not accept Iran’s conditions, he said, “the Strait of Hormuz will not be opened under any circumstances.”

IRAN’S PUBLIC TERMS

• The war: Rezaei said ending the regional conflict, including fighting beyond Iran’s borders, belongs on the list mediators asked Tehran to produce.
• The blockade: A Guards spokesman said the strait stays shut until the United States lifts what Tehran calls a blockade of Iranian ports.
• Sanctions and cash: Officials have tied any return of traffic to the removal of sanctions and the release of frozen Iranian assets abroad.
• Compensation: The Guards have also demanded payment for wartime damage, a claim Tehran has repeated since the June memorandum of understanding stalled.

Those terms sit on top of a June memorandum signed in Islamabad with Pakistani and Qatari help. That 60-day paper was meant to reopen the waterway and lift the U.S. naval blockade. It did not hold. A legal briefing by Just Security later said the memo included a U.S. pledge to work with regional partners on a reconstruction plan worth at least $300 billion. Washington has not signaled it will pay, lift the blockade, or drop the sanctions Iran wants off first.

Oman’s Share of the Waterway Is Still Unsettled

The Guards went further than the diplomats. Mohebbi said Wednesday, according to Sepah News, that “agreements have been reached regarding each country’s share of the strait’s waters as well as Iran and Oman’s share of its revenues.” He accused the United States of delaying the talks. He also claimed the strait belongs to Iran and Oman, that the two sides had negotiated for about a month, and that hostile warships were at least 400 kilometers from the waterway.

The foreign ministries had been more careful the day before. After talks in Tehran between Iranian Foreign Minister Abbas Araghchi and Omani Foreign Minister Sayyid Badr bin Hamad al Busaidi, they described an “interim framework” for restarting ship transits and a mine-clearing project. Bloomberg noted that joint statement did not announce a final deal and did not mention fees.

Hours after Mohebbi spoke, a senior Iranian source told Reuters that Iran and Oman were still working on the details. Iranian Deputy Foreign Minister Kazem Gharibabadi said a potential deal would keep military vessels out of the strait. He also said the routes would be temporary, with 30 to 60 days to talk through a lasting traffic plan.

WHAT WE KNOW

• The geography: Iran and Oman are the two coastal states on the strait, and any commercial corridor has to use waters both of them claim.
• The public paper: The August 25 joint statement covered an interim transit framework and mine-clearing, not a finished revenue split.
• Muscat’s last UN line: At the International Maritime Organization’s Council on July 9, Oman said it does not support transit fees on Hormuz traffic.

WHAT IS UNCONFIRMED

• A revenue split: The Guards say waters and revenues have been shared. Oman has not confirmed a fee cut, and a senior Iranian source told Reuters the details are still open.
• Leadership sign-off: A U.S. official told the New York Post on August 27 that the terms still need approval inside Iran and are “not even close to done.”

Oman has spent the summer trying to keep those two tracks apart. Al Busaidi told Monte Carlo Doualiya in late June that Oman is “not in favor of imposing transit fees,” that such charges are prohibited under international law, and that Muscat would stay inside the United Nations Convention on the Law of the Sea. He left the door open only to voluntary charges for lights, traffic control and pollution response, the kind of navigation dues used in the Strait of Malacca and around Singapore.

That gap is the story the conditions list is built on. Iran wants a paid corridor it can split with the neighbor that owns the southern shore. Oman wants ships moving again without becoming the cashier for a toll the rest of the world has already rejected.

The Corridor Would Split Inbound and Outbound Traffic

The strait is a tight piece of water. The International Energy Agency’s factsheet puts it at 29 nautical miles at its narrowest, with 2-mile-wide inbound and outbound channels and a 2-mile buffer. Rezaei said ships would use a designated central channel if Washington met Iran’s terms. Gharibabadi described a different cut: commercial ships heading into the Gulf would travel through Iranian waters, while outbound ships would follow a route that runs partly through Iranian waters and partly through Omani waters.

Al Jazeera, working from shipping data, said the little traffic still moving already uses a workaround of that kind, with Iranian authorities pressing vessels onto a northern path along Larak and Qeshm. Before the war, ships used IMO shipping lanes through the center. The new map would turn a shared international lane into two national channels, which is how a revenue claim even gets a hook. If each government “provides passage” on its side, a service charge can be dressed up as something other than a toll.

Gharibabadi said military vessels would be kept out. That demand collides with how the United States and its partners have used the Gulf for decades, and it is one reason Washington treats an Iran-Oman paper as incomplete even if Muscat and Tehran initial it. Iranian Foreign Ministry spokesman Esmail Baghaei said in August that talks with Oman on a safe-passage route were separate from the decision to reopen the strait, which he tied to U.S. conditions coming off.

Five Ships a Day Where a Hundred Used to Pass

The U.S. Energy Information Administration counted 20.9 million barrels a day in early 2025 moving through Hormuz, about 20 percent of world petroleum liquids use and a quarter of seaborne oil. The IEA’s 2025 full-year tally was 19.87 million barrels a day, almost 15 million of that crude and condensate.

Iraq, Kuwait, Qatar, Bahrain and Iran have almost no other way out. Saudi Arabia and the UAE can shift some crude by pipe, the IEA says 3.5 to 5.5 million barrels a day, and the EIA puts the Saudi East-West line plus the UAE’s Abu Dhabi line at about 4.7 million barrels a day of bypass. That still leaves most of the Gulf’s oil, and all of Qatar’s LNG, stuck if the strait stays shut. Qatar exported more than 112 billion cubic meters of LNG in 2025, the IEA said, and about 93 percent of it went through Hormuz, along with 96 percent of the UAE’s smaller 7 billion cubic meters. Together that was almost 20 percent of world LNG trade, with no second sea route.

Al Jazeera, using Kpler and vessel counts, said traffic fell from more than 100 ships a day before the war to an average of five after the Guards announced the closure on March 2. A June 17 interim deal lifted the daily average to 20, still a fifth of normal, before the United States restored its blockade on July 14. From July 15 to August 23 the average was again about five, an almost 95 percent drop. Direct crude moving via the strait was 2.2 million barrels a day, Kpler told the newsroom, against Gulf crude exports that had fallen from about 17 million barrels a day in 2025 to roughly nine million in August. Richard Matthews of Gibson Shipbrokers told Al Jazeera there is no alternative maritime route, which is why the volume loss has been so large.

What still moves, Al Jazeera said, is mostly tankers under naval escort or with tracking switched off. The EIA estimated that 89 percent of Hormuz crude went to Asia in the first half of 2025, with China, India, Japan and South Korea taking 74 percent. The United States took about 0.4 million barrels a day through the strait, 7 percent of U.S. crude imports. Bangladesh, India and Pakistan, the IEA said, bought almost two-thirds of their LNG via Hormuz in 2025.

Where the Extra Fuel Bill Landed

Fossil-fuel importers paid an extra $330 billion on seaborne fuel bills in the six months after the strikes, the Centre for Research on Energy and Clean Air found, measured against what futures markets had priced in the days before February 28. Luke Wickenden and Lauri Myllyvirta, the authors, called it the largest sustained oil-price shock since the 1990 Gulf War. The EU bore $78 billion of the gross extra, China $35 billion and India $22 billion. Typical lower-income importers paid about twice as much relative to GDP as rich ones.

Brent averaged $93 a barrel from March through August, against a pre-war expectation of $69. It spiked to $105 on July 23, then the July average settled at $84. Diesel never followed crude down. CREA said the diesel premium sat above 55 percent in five of the six months and ended August at 65 percent above the old curve. Asian LNG ran 75 percent above pre-war expectations, European gas 60 percent above. U.S. gas, which Hormuz cannot reach, finished 9 percent below its own pre-war curve.

On a net basis after export earnings, China paid $31.3 billion extra for crude and India $20.5 billion. Australia took the largest diesel hit at $6.4 billion. Matthews told Al Jazeera that inventories built before the war have now been burned through, so the next six months look more brittle if the strait stays pinched. Oil on Friday, August 28, drifted lower on talk of an Oman corridor. The ships did not come back with the headlines.

Transit Passage Leaves No Room for a Toll

The legal fight is older than Rezaei’s list. In straits used for international navigation, the UN Convention on the Law of the Sea says all ships and aircraft enjoy the right of transit passage shall not be impeded. Coastal states are not to hamper that transit, and they are not to suspend it. Oman has said it will stay inside that rule. Iran signed the convention in 1982 and has not ratified it. The United States never joined, but treats the navigation rules as custom, which is why U.S. officials keep repeating that Hormuz is an international waterway.

The Sultanate of Oman reiterates that the right of transit passage through straits used for international navigation is guaranteed under international law. Oman remains fully committed to these legal principles and does not support the imposition of transit fees on vessels passing through the Strait of Hormuz.

Omani statement, IMO Council Meeting 137, London, July 9, 2026

U.S. Secretary of State Marco Rubio said in June, “It’s an international waterway. No country is allowed to charge tolls or fees on an international waterway.” He told senators that if Washington accepted a Hormuz toll it would be copied elsewhere. He also said the U.S. blockade on Iranian ships exists because Iran closed the strait, mined parts of it, and fired on commercial vessels. “If they open the Strait, we will lift our blockade,” he said, with ships transiting “without being fired on and without paying a toll.”

President Donald Trump has claimed the strait is already open under U.S. control. In July, after the memorandum collapsed, he reinstated the blockade of Iranian ports and said the United States would be known as guardian of the strait and reimbursed at 20 percent on cargo for the cost of keeping it safe, according to his Truth Social post as reported by the Wall Street Journal and the BBC. Tehran calls that a blockade of its oil. Washington calls Iran’s fee a ransom on everyone else’s. Both claims are an attempt to charge for a passage the convention says is free.

No Deal Holds Without the U.S. Blockade Coming Off

A U.S. official told the New York Post on Thursday that a purported Iran-Oman deal to control the strait and share fee revenue “doesn’t mean anything unless we approve it.” The official said, “It doesn’t matter what the two of them, Iran and Oman, do. There is no deal without Trump pulling the blockade.” The same official said the terms were “not even close to done” and still needed approval inside Iran. Defense Secretary Pete Hegseth said earlier in August that the Navy can run the blockade indefinitely by rotating ships.

That is why the Oman paper and the Rezaei list can move on separate tracks and still leave the water empty. Tehran needs the oil sales the blockade has cut. Rezaei told Iranian state television that Iran had “broken the maritime blockade” during the ceasefire and exported 70 million to 80 million barrels, and that new export routes were expanding. The U.S. Navy’s own account of the earlier blockade was that it redirected more than 140 vessels and disabled nine. If those port gates stay shut, a corridor drawn on a map with Muscat does not load a tanker in Kharg or Bandar Abbas.

HOW THE STRAIT GOT STUCK

1. February 28, 2026: The United States and Israel strike Iran, and the war begins.
2. March 2, 2026: The Revolutionary Guards announce the strait’s closure, and daily traffic falls to about five ships.
3. April 2026: Washington and Tehran announce a ceasefire meant to restore traffic. The United States imposes a blockade of Iranian ports. Neither step holds as designed.
4. June 2026: A 14-point memorandum is signed in Islamabad. The U.S. blockade is lifted for a time, and daily traffic rises to about 20 ships.
5. July 14, 2026: The United States restores the blockade after the memorandum unravels. Traffic falls back to about five ships a day.
6. August 25-27, 2026: Iran and Oman issue an interim-framework statement. The Guards claim a revenue deal. Rezaei says conditions for reopening are being written, and a U.S. official says no paper matters until the blockade comes off.

The sharper read of the Oman talks is not that Muscat is about to collect Hormuz rent. It is that Iran is trying to lock in a post-war map, inbound on its coast, outbound shared, military ships out, some kind of service charge in the fine print, while using the conditions list to keep leverage on Washington. Oman’s use, for Tehran, is respectability. For shipowners, Muscat is the only coastal state that has told the IMO it will not build a toll booth. For the White House, any deal those two sign is still a draft until American warships stop holding Iranian ports.

From July 15 to August 23, about five vessels a day passed a strait that used to take a hundred. Rezaei is still writing the price of letting the rest through.