Proposed Hormuz passage deal not feasible for shipping industry, sources say

A proposed deal between Iran and Oman that would give Tehran control over ships entering the Gulf through the Strait of Hormuz is not easily workable due to US sanctions and restrictive insurance clauses on any payments, four industry sources tell Reuters.

Before the outbreak of the US-Israeli war with Iran in late February,  the narrow waterway between the Gulf and the Indian Ocean was the main route for about a fifth of world oil supplies and other vital goods. It was freely open to all ships with no fees.

Control of the strait has been the biggest sticking point in efforts to end the conflict.

Under the latest proposal, Tehran would be able to intervene if necessary with any inbound traffic, while outbound traffic would follow a route between Iran and Oman, with exit clearance granted through Oman after notifying Iran, a senior Iranian source told Reuters this week.

The ability of merchant ships to navigate international waterways “safely, predictably and without unnecessary impediment is fundamental to resilient supply chains, economic stability and energy security,” the world’s leading shipping associations said in an open letter this week.

Introducing compulsory charges through the strait for transit or service fees was “a toll in all but name,” the letter said, which was sent to the UN’s shipping agency.

“It would establish a precedent that could undermine the internationally recognized legal framework governing straits used for international navigation and transit passage.”

Iran is seeking fees of between 5% and 7% of the price of cargoes from ships using the strait, according to the senior Iranian official. Oman is discussing fees of around 3%, while Washington wants no fees at all.

The UN’s International Maritime Organization said it could not comment on reports of the proposals.

Times of Israel staff contributed to this report.