Iran keeps Hormuz shut as sanctions demands cloud reopening deal

Iran has hardened the conditions attached to reopening the Strait of Hormuz, tempering expectations that an emerging navigation agreement with Oman will quickly restore normal commercial shipping.

Tehran is refusing to reopen the strait unless the United States lifts restrictions affecting Iranian ports, ends sanctions, releases frozen Iranian assets and provides compensation for damage from the recent conflict, according to reporting on Monday. Talks with Oman are continuing, but progress now depends on a broader accommodation with Washington.

The position materially complicates the more limited shipping arrangement under discussion last week, which focused on organising navigation lanes and restoring safer passage through the waterway.

Oman and Iran have been negotiating the future administration of navigation since June. Their joint statement established a working group covering navigation, services and associated costs, while Oman separately reaffirmed in July that it was seeking to restore freedom of navigation in accordance with international law.

Oil prices moved higher on Monday as optimism over an imminent reopening weakened, with Brent trading near US$85 during the European session.

For commodity and trade-finance banks, the central problem is that a draft navigation framework does not itself remove transaction risk.

Cargoes delayed inside or outside the Gulf can remain financed for longer than originally expected, extending inventory holding periods and delaying the conversion of financed goods into receivables. Changes to ports, shipping dates and routes can also require amendments to documentary-credit terms.

The uncertainty is especially significant for transactions where lenders, traders and insurers must make commitments before knowing whether a vessel will pass through Hormuz on its intended schedule.

Oman’s previous efforts have included work with the International Maritime Organization on a temporary maritime corridor, demonstrating that technical solutions have been available even while the wider political dispute remains unresolved.

The latest Iranian position therefore shifts the focus back from lane design to geopolitics. Even if Iran and Oman agree how commercial vessels should transit the strait, the restoration of normal shipping may remain tied to negotiations extending far beyond maritime administration.