After the US and Iran finally agreed an interim deal last month to reopen the Strait of Hormuz and extend a ceasefire, Donald Trump told the “ships of the World” to “start your engines. Let the oil flow!”
Yet in three and a half weeks since the US president announced the strait would be open “toll free”, the passage of ships — and flow of oil — has at best been a messy, tenuous stop-start, as the vital waterway remains the key point of contention.
Following the latest exchange of strikes between the US and Iran, Trump said he believed their fragile ceasefire was “over”.
Mediators were trying to keep the diplomatic process on track, said a person briefed on the matter. But their task is constantly being challenged by two competing forces: Trump’s push to get ships moving through the strait quickly to ease an energy crisis ahead of US midterm elections, and Iran’s resistance to any dilution of its control over the waterway.
This put the warring parties in repeated cycles of tit-for-tat attacks. Each time Iran targets shipping in the strait that is not using the routes it wants, the US responds by striking the Islamic republic and Tehran retaliates.
Previously such clashes have been contained, but they constantly undermine a fragile April 8 ceasefire, the interim deal signed on June 17 and diplomatic efforts to broker a permanent settlement.
For Iran, the strait — which it had never closed before the US and Israel launched the war on February 28 — has become its most powerful source of leverage as it has raised the costs of the conflict to the global economy.
Tehran is now loath to fully relinquish the key card it holds in negotiations that are supposed to focus on a final settlement.
“Iran does not want to cede its leverage over the strait — its weapon of mass disruption — before a broader deal is reached on US economic relief,” said Ellie Geranmayeh, of the European Council on Foreign Relations. “For Trump, the reopening of the strait is at the heart of the memorandum of understanding — and without it, he will be under immense pressure by Republican hawks to resume war with Iran.”
She added: “The two sides should have come up with a mutually acceptable protocol for the strait before they signed the MoU.
“The longer the absence of such an understanding continues, the more deadlocked the strait becomes, and the more likely that Washington and Tehran return to full-blown war.”
Under the MoU signed last month, Tehran agreed to allow ships through the strait without charge during a 60-day extension of the April 8 ceasefire.
In return, the US would lift its naval blockade on Iranian ports. Iran would demine the strait within 30 days, with traffic supposed to gradually return to prewar levels.
As a financial incentive, the US granted Tehran a waiver to sell its crude and oil-related products in dollars.
But Tehran said it would impose “service fees” in future. The precarious deal was swiftly tested as Tehran insisted ships use a route close to its coastline where it can monitor traffic through the waterway, through which about a fifth of the world’s oil and liquid natural gas passed before the war.
The US, however, has encouraged vessels to transit near the coast of Oman, whose territorial waters flow through the waterway. That has enabled American warplanes to provide air cover to ships since the end of May.
The emergence of the alternative route has frustrated Tehran as it has reduced its control, said a diplomat briefed on the matter.
That friction came to the fore days after US vice-president JD Vance led a high-level delegation to Switzerland on June 21 for the first round of high-level talks on a final settlement, including a deal on the Islamic republic’s nuclear programme.
The parties agreed to set up a hotline to avoid incidents in the strait, counter miscommunications and co-ordinate on shipping as mines were cleared.
But within days, Iran had fired at a ship as it warned vessels not to use what it called unauthorised routes. That triggered a cycle of retaliatory attacks. The warring parties then held several days of talks in Qatar — one of the lead mediators — last week.
Those negotiations focused on the strait as disputes over the waterway detracted from the already challenging diplomatic push for progress on a nuclear deal within the 60-day ceasefire extension.
Mediators believed they had made tentative progress. But then the latest attacks erupted, further rattling an already nervous shipping industry. Even before that, shipping companies had warned that it would take time to restore confidence and bring down insurance premiums.
The US-Iran talks had been expected to resume on July 12, after this week’s days-long funeral of Iran’s assassinated supreme leader, Ayatollah Ali Khamenei, was completed.
But it was not clear if they would now go ahead. Trump said on Wednesday that negotiators “can talk, but I think they’re wasting their time”.
Under the MoU, the future status of the strait was supposed to be discussed between Iran, Oman and other Gulf states.
But since the interim deal was signed on June 17, Iran has attacked five vessels along Oman’s coast, including tankers belonging to Saudi Arabia and Qatar, despite the latter’s role in mediation.
Iran’s powerful Revolutionary Guards have been hailing ships over the radio and telling them to change course to the Iranian route, said people with knowledge of the situation.
In a sign of escalating tensions — and the US’s mounting frustration — Washington said on Tuesday it was revoking the waiver on Iran oil sales.
The UK’s Maritime Trade Operations Centre that day increased the threat level to “severe”. This would “have an effect on the appetite [of ships] to take the risk to go through”, one shipping executive said.
Arsenio Dominguez, secretary-general of the International Maritime Organization, said on Wednesday he urged “shipowners, ship operators and all relevant authorities to avoid exposing seafarers to unnecessary danger by transiting the strait”.
More than 570 vessels have passed through the strait since the MoU, of which almost three-quarters have been exiting the Gulf, according to Lloyd’s List Intelligence. More than 150 transits have been crude oil tankers.
Despite the strikes, a handful of ships, including one belonging to the French container shipping line CMA-CGM and an Indian cargo carrier, sailed through on Wednesday morning following the route set out by Iran.
But several ships that appeared to have been heading for the Omani route early on Wednesday, including the Indian-owned crude oil tanker Lila Vadinar and an Adnoc-operated LPG tanker, made U-turns, according to ship-tracking data.
Others including Singaporean tanker Mercury Hope appeared to divert course from the Omani to Iranian coastal route.
One tanker executive said: “It’s a mess.”
Cartography by Jana Tauschinski
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