Iran and Oman Exchange Proposals for Managing Strait of Hormuz

Iran has rejected a proposal from Oman for joint management of the Strait of Hormuz and instead presented a rival plan, as the two sides continue to negotiate the terms of a final agreement. The news was disclosed by Iranian Deputy Foreign Minister Kazem Gharibabadi in a state broadcast on Tuesday (July 28).

According to Gharibabadi, Oman's proposal fails to adequately address Tehran's concerns regarding control of the strait. Iran has offered a counterproposal, under which Tehran would assume greater control over the waterway.

The Strait of Hormuz has been a flashpoint in the conflict between the United States and Iran since late February, when U.S.-Israeli strikes against Iran began. Before the war, roughly one-fifth of the world's oil and liquefied natural gas supply passed through this route. Shortly after hostilities erupted, Tehran shut the strait, triggering a global supply challenge. The U.S. subsequently imposed a corresponding blockade on Iranian ports.

Following a memorandum of understanding signed by Iran and the U.S. on June 17, the strait was expected to reopen, free of charge to vessels, for at least 60 days. However, the vague wording of the MoU sparked significant disagreement over who would have ultimate control of the waterway — which runs through the territorial waters of both Iran and Oman — as well as what shipping lanes vessels should use.

This led to fresh U.S. strikes on Iran and retaliatory Iranian attacks on U.S. assets and military infrastructure in the region. Fighting paused last weekend, but diplomatic talks over the strait's fate remain ongoing.

What Does Oman Want?

Gharibabadi revealed that Muscat proposed a joint regional mechanism under which the two countries would control the strait on a 50-50 basis. This proposal would give Iran control over the shipping lane on its side of the territory, while Oman would control the lane along its coast.

“Oman proposed creating a single route through the Strait of Hormuz, with 50 percent in our territorial waters and 50 percent in Omani waters. Vessels transiting the Strait of Hormuz could enter through our waters and exit through Omani waters,” Gharibabadi told state television. In addition, the proposal called for “voluntary fees” from ships for both nations.

Oman’s proposal appears to mirror the management agreement for the Malacca Strait, where Indonesia, Malaysia, and Singapore request voluntary contributions from transiting vessels for navigation, environmental protection, and search-and-rescue operations. This proposal also seemed to gain support from regional states. Qatar's Foreign Ministry said Gulf Cooperation Council foreign ministers met Tuesday to discuss the matter further.

However, Gharibabadi said Iran ultimately rejected the proposal on national security grounds.

What Does Iran Want?

Gharibabadi said Tehran's counterproposal would allow Iran to manage shipping through its own territorial side, while Muscat would manage a portion — but not all — of the opposite lane. “Our proposal is for one route entirely within Iran’s territorial waters, and part of the other route also passing through Iran’s waters, so that Iran can effectively monitor both inbound and outbound traffic,” he said.

Gharibabadi warned that the strait would remain closed if Oman rejects the proposal, adding that the Strait of Hormuz cannot return to the pre-war arrangement of free passage for vessels.

Al Jazeera correspondent Resul Serdar Atas, reporting from Tehran, said Oman is considering a different proposal that might include three sea lanes: one through Iran’s territorial waters, an international lane, and one through Omani waters. “Sources indicate Iran is showing flexibility,” Serdar reported.

Other Points of Contention

Other disagreements include the direction of vessel movement in the lanes, fees, who gets to define the terms of agreements reached, and mine-clearing operations in the strait, reported Al Jazeera correspondent Tohid Asadi from Tehran.

While the U.S. accuses Tehran of laying mines in the strait, Tehran has not confirmed this. However, the Islamic Revolutionary Guard Corps published a map of permitted routes for vessels in April, claiming it would ensure ships avoided potential mines. This route brings vessels closer to Iran’s coast than before.

Another clear issue is the fee for using the strait and the tariffs Iran wants to impose on vessels, versus voluntary contributions. Professor Paul Musgrave at Georgetown University in Qatar noted that the Malacca Strait model generates about $70 million annually through a voluntary fee system. However, that figure is far removed from the $1 million per vessel that Tehran is reportedly proposing as “service fees” at the Strait of Hormuz. Tehran has previously stated that shipping fees would be used for reconstruction after widespread infrastructure damage inflicted by U.S.-Israeli strikes.