Hormuz Draft Agreement Reportedly Awaits Khamenei Approval

Oil markets are waiting for a decision from Iran’s supreme leader following completion of a draft agreement between Iranian and Omani negotiators. The agreement, if approved, could reopen the Strait of Hormuz, the primary export route for Persian Gulf oil and liquefied natural gas (LNG). Two regional officials informed the Associated Press that the draft had been finalized, just hours after President Donald Trump suggested an announcement could come on Wednesday or Thursday.

The proposed temporary arrangement would allow ships entering the Persian Gulf to pass through waters controlled by Iran, while vessels leaving the Gulf would utilize a route managed by Oman. This agreement would reestablish aspects of the U.S.-Iran memorandum signed in June, which fell apart after attacks on shipping resumed. However, the main hurdle remains the issue of transit fees.

Tehran is reportedly seeking payments ranging from 5% to 7% of cargo value, whereas Oman has proposed a 3% charge. The U.S. administration has adamantly rejected any agreement that would require ships to pay Iran for passage through a waterway that was once open to international traffic before the Iran-U.S. conflict began on February 28.

The diplomatic efforts to resolve the Hormuz issue are vital as the strait's traffic remains only a small fraction of normal levels. According to Kpler, only eight ships crossed the strait on Tuesday, compared to the usual 130 to 140 transits daily before the U.S.-Israeli war with Iran commenced. Initially, oil prices dropped upon the news of a potential agreement, anticipating the restoration of Gulf exports.

However, Brent crude promptly rebounded to approximately $80 per barrel, as attacks on regional shipping persisted. On Wednesday, the Houthi group claimed responsibility for firing ballistic missiles at a Saudi tanker near Yemen's Yanbu port. Additionally, an Indian-flagged vessel sank off the coast of Yemen on Tuesday after being struck by an explosive-laden boat, and another cargo ship reported being hit near Oman's Al Khasab port in the Strait of Hormuz.