Hormuz Deal Nears As US, Qatar Signal Progress
American and Gulf officials say an interim agreement to reopen the strategic waterway to Iran is close, as oil prices fall on optimism
Synopsis
Rebuilding the Strait of Hormuz to commercial shipping is gaining traction in talks between the United States and Qatar, and a draft proposal is said to be circulating in talks between Washington and Tehran. Oil prices declined when markets started to factor in a potential interim agreement.
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American and Qatari officials say diplomatic efforts to reopen the Strait of Hormuz, through which some 20 percent of the world's oil and liquefied natural gas shipments proceed daily, are reportedly picking up.
Diplomatic contacts were at "very progressive stages" with Qatar, Pakistan and Oman serving as mediators, coordinating closely with each other in order to exchange draft proposals between Washington and Tehran, according to Qatar's foreign ministry spokesperson Majed al-Ansari.
AdvertisementUS Secretary of State Marco Rubio told reporters there had been progress in those talks, but not finality, and that officials were "hoping that will happen very shortly.
Treasury Secretary Scott Bessent said he was "sure we can get a deal done today or tomorrow," a statement that helped propel oil prices down more than five percent, bringing the price of Brent crude to just below $79.50 a barrel, the first time it has closed below $80 since mid-July.
An Interim Arrangement is not a Final Settlement
Technically the Strait of Hormuz is still open, said Rubio, adding that Washington is pursuing a plan for more ships to pass through the waterway safely in the near future, pending a discussion of the "ultimate deal" — Iran's denuclearisation.
The prospective agreement would reportedly allow ships to enter the Persian Gulf via Iran and exit via Oman.
AdvertisementThe talks with Oman were "positive" at both political and technical levels and differences remain on operational details, Iranian foreign ministry spokesman Esmaeil Baghaei said, describing discussions as aimed at establishing safe inbound and outbound shipping lanes.
Outstanding matters are how to reopen the waterway, sea transport charges and other security issues, say Iranian officials. Emir of Qatar Sheikh Tamim bin Hamad Al-Thani spoke to President Donald Trump on Tuesday by phone about de-escalation efforts.
A Volatile Backdrop
The current stand-off dates back to a US naval blockade on Iran on April 13 this year, which succeeded when the Islamabad Talks failed during previous ceasefire, and after which Iran has essentially banned the majority of maritime traffic through the strait, but Washington has continued to block shipping destined for Iran.
Tehran has tried to keep some control over the strait, under the terms of a memorandum of understanding signed with the U.S. in June — a document American officials say is dead and are pushing for unfettered passage under international law.
Why It Matters
Ships would face lower costs for using shipping-insurance when they pass through one of the world's most disputed choke points, and an easier, more durable opening of Hormuz would take away months of upward pressure on global energy prices.
An interim shipping arrangement would give some respite to India, one of the biggest importers of Gulf crude, in import costs, though officials on both sides are wary of it being a solution to the crisis, which stems from the nuclear dispute.
