Gulf nations are unlikely to agree to a toll plan for Strait of Hormuz safe

What I’m hearing from energy insiders

The Great Hormuz Debate.

Exactly how many ships – and how much oil – are getting through the Strait of Hormuz? With apologies to Shakespeare’s Hamlet, that is the question.

Let’s start with what we do know.

We know that the amount of oil and other products is well below its pre-war levels. No one is arguing the market is supplied at the same level it was at the start of the year, when fully 20% of all the world’s oil was sourced through the narrow Gulf corridor.

We also know that Iran continues to assert control over significant portions of ship traffic. You can debate if they actually do, but you can’t debate that they claim power over the seaway.

If you believe Iran, very little oil is getting through the Strait of Hormuz. If you believe the United States government, a fairly significant amount of oil is successfully making it out, largely in part because of escorts from the U.S. Navy. 

Kpler – the parent company of Marine Traffic, whose data we have used extensively (thank you to them!) over the last few months – noted risks rising again in the region before the market got a couple more positive headlines.

Those headlines were twofold:

First, Iran and Oman claim to be close to some kind of deal where the two countries establish a joint shipping corridor through the Strait. The idea is that the cross-waterway neighbors would help ensure safe passage for ships, clear any mines, and more. We don’t have many more details than that, but that scant communique was enough to help send oil down a couple of bucks on Tuesday. The positive tone was nice, but let’s be clear: neither Iran nor Oman controls or oversees the waterway. It is an international shipping channel that is open to all international navigation. Yes, Iran can threaten, harass and disrupt shipping, but the two countries have no legal basis to make any kind of ‘safe shipping’ deal.

Also, as I noted in an interview with Energy Aspects’ Amrita Sen, other Gulf nations are very unlikely to agree to or adhere to any ‘deal’ that would require them to pay a fee or toll for safe passage. I’ve personally spoken with representatives of some of these nations and can assure you that they will be frustrated with any pay-to-ship type situation.

The other headline is that Pakistan says it made “significant progress” in peace talks with Iran. Pakistan has been an important back-channel player in reaching Iran, and the positive tone of its comments eased oil markets a bit.

This news all plays around the backdrop of the U.S. going harder against Iran economically.

Labeled “Operation Economic Outcast,” US Treasury Secretary Scott Bessent is waging an economic sortie against Iran.

The idea is to pressure Iran’s hardline leadership enough that they are forced to come back to the negotiating table and/or cease aggression around the Strait of Hormuz. Well, as of this writing, we are still waiting on the exact details of what…