Proposed Strait of Hormuz Deal Faces Major Obstacles as Shipping Industry Warns of Legal and Financial Risks

August 8, 2026

A proposed arrangement designed to restore commercial shipping through the Strait of Hormuz is facing serious resistance from the international shipping industry, raising doubts over whether the latest diplomatic efforts between Iran and Oman can quickly return the strategically important waterway to normal operations.

The proposal has emerged amid months of conflict involving the United States and Iran, with the Strait becoming one of the biggest pressure points for global energy markets. While diplomatic discussions have generated hopes of reopening the route, shipping companies and insurers remain concerned that the proposed system could expose them to sanctions, financial penalties and increased legal risks.

Proposed System Would Give Iran a Role in Shipping

Under the proposal being discussed, Iran would receive a significant role in managing vessels entering the Gulf through the Strait, while Oman would participate in a broader arrangement intended to facilitate maritime traffic.

Iran has sought authority over inbound shipping and greater visibility over outbound vessels. Iranian officials have argued that such measures are necessary to manage security in the waterway during the continuing regional crisis.

Iran and Oman have also reached an understanding over the geographical coordinates of a potential shipping route, according to Iran’s Foreign Ministry. However, Tehran has acknowledged that agreeing on a route alone would not automatically guarantee security for vessels using the waterway.

That distinction is crucial because shipping companies need more than a designated route. They require predictable rules, insurance protection and guarantees that their vessels will not be attacked, detained or subjected to unexpected demands.

The Biggest Problem: Proposed Transit Fees

One of the most controversial elements is the possibility of charging vessels for passage.

Reuters reported that Iran has sought fees equivalent to roughly 5% to 7% of the value of cargo, while Oman has considered a lower figure of around 3%. The United States, however, has opposed the introduction of such charges.

For shipping companies, the issue is not simply the additional cost.

A payment made to an Iranian authority could create sanctions-related problems for companies operating under U.S. jurisdiction or with exposure to the American financial system. That could make a seemingly straightforward transit payment a much more complicated legal transaction.

The shipping industry is therefore concerned that accepting the proposed arrangement could place companies between conflicting requirements from Iran, the United States, insurers and international maritime authorities.

Insurance Could Become a Major Barrier

Insurance is another critical obstacle.

Ships traveling through high-risk areas require specialized war-risk coverage. Insurers determine premiums and conditions based on the probability of attacks, detention, damage and other threats.

The proposed Iranian fee system has reportedly created concern among insurers. Reuters reported that the Lloyd’s Market Association has introduced clauses that could terminate insurance coverage for vessels paying certain fees to Iranian authorities.

That creates an unusual dilemma.

A shipowner could potentially obtain permission to travel through the Strait but then risk losing insurance protection by making the required payment.

For large commercial vessels carrying millions of barrels of oil or other valuable cargo, that level of uncertainty is extremely difficult to accept.

Strait Traffic Has Already Fallen Sharply

The urgency of the negotiations is illustrated by the dramatic decline in vessel movements through Hormuz.

Before the current crisis, approximately 130 to 140 vessels passed through the Strait each week. Reuters reported that only 33 vessels crossed between Monday and Thursday of the latest week, compared with 50 during the equivalent period the previous week.

Only a small number of crude oil tankers have been able to move through the waterway.

The slowdown is having consequences for energy traders, oil producers, refiners and shipping companies. Some cargoes are being offered at substantial discounts in an effort to attract buyers willing to deal with the additional risks surrounding transportation.

The situation demonstrates that simply announcing an agreement may not be enough to restore normal trade.

Why Hormuz Is So Important to the World

The Strait of Hormuz is one of the most important maritime chokepoints on the planet.

It provides a crucial connection between the Persian Gulf and international waters, making it particularly important for energy exports from major Gulf producers.

Any prolonged disruption can influence crude oil prices, tanker rates, insurance costs and inflation expectations in countries thousands of kilometres away.

That is why governments in Asia, Europe and the Middle East are closely following the negotiations.

For countries heavily dependent on imported energy, the reopening of Hormuz could help stabilize supplies and reduce transportation uncertainty. For oil-producing nations, normal shipping would make it easier to reach international customers.

The United States Has a Different Position

Washington has opposed any arrangement that effectively gives Iran unrestricted authority over international commercial traffic.

The United States wants commercial vessels to be able to move through the waterway without what it considers unacceptable restrictions or mandatory payments.

At the same time, a U.S. official said Friday that Washington expects an agreement between Iran and Oman could be announced soon. According to the official, the objective is to allow commercial shipping through the Strait without impediments, with possible U.S. steps tied to Iran’s implementation of its commitments.

This creates a significant gap between diplomatic optimism and the practical concerns of shipping companies.

Iran’s Position Is Also Evolving

Iran views the Strait as an important source of strategic leverage.

The country’s ability to influence maritime traffic gives Tehran considerable bargaining power in its confrontation with Washington. Reuters has reported that Iran has developed a system involving vessel clearances, government arrangements and, in some cases, fees for safe passage.

At the same time, Tehran has indicated that discussions with Oman do not necessarily amount to direct negotiations with the United States.

Iranian officials have stressed that the broader conflict must also be addressed before the maritime crisis can be completely resolved.

This means that the shipping question cannot easily be separated from the wider geopolitical dispute.

Markets Remain Extremely Sensitive

Oil traders are watching every development closely.

When diplomatic progress appears possible, oil prices can decline as traders anticipate the return of supply flows. When negotiations appear to weaken or new restrictions are announced, prices can rise rapidly.

On August 6, oil prices jumped by more than $3 a barrel after news emerged that an Iranian parliamentary committee was considering legislation that could prohibit U.S. and Israeli vessels from using the Strait and impose substantial fines on violators. Brent crude settled at $82.49 a barrel that day.

The conflicting signals demonstrate how fragile the situation remains.

What Needs to Happen for Shipping to Return?

For the proposed arrangement to succeed, several issues will need to be resolved.

First, shipping companies need clear and internationally workable rules governing transit.

Second, any fee system must avoid creating sanctions problems.

Third, insurers need confidence that vessels will remain covered throughout their journeys.

Fourth, shipowners need credible security guarantees.

Finally, the United States, Iran and Oman must agree on mechanisms that can actually be implemented by commercial operators rather than existing only as diplomatic commitments.

Without these conditions, companies may continue avoiding the Strait even if governments announce a political agreement.

A Test for Global Trade

The Hormuz negotiations have therefore become more than a regional diplomatic exercise. They represent a test of whether governments can restore one of the world’s most important commercial waterways while balancing national security, sanctions and international maritime law.

Iran wants greater influence over traffic entering the Gulf. Washington wants unrestricted commercial navigation. Oman is attempting to provide a diplomatic bridge between competing positions. Meanwhile, shipping companies want one thing above all else: a predictable and legally safe route.

The success or failure of the proposal could have consequences for energy prices, international trade and the wider Middle Eastern conflict.

For now, optimism about a possible reopening remains tempered by serious practical obstacles.