• An agreement between Iran and Oman over Strait of Hormuz traffic has not been finalised, according to a senior Iranian source.
  • The deal, which had seemed imminent, would have coordinated shipping routes and potentially reopened the strait to oil shipments.
  • Markets remain on edge as the standoff continues, with implications for global energy prices.

Fragile Prospects

Efforts to finalise an agreement between Iran and Oman over the management of Strait of Hormuz traffic have hit a snag, according to a senior Iranian source familiar with the matter. The source, who spoke on condition of anonymity, told Reuters that while talks have made significant progress, "an agreement has not yet been finalised." This comes as a surprise, given that just days ago, both sides had indicated that a deal was in its final stages.

Omani officials had publicly stated that coordinates and routes for shipping had been agreed upon, sparking hopes that the strait — through which about a fifth of global oil consumption passes — would soon reopen to tanker traffic. The optimism briefly lifted oil prices, but now the market is facing renewed uncertainty.

The negotiations are part of a broader effort to ease tensions between Iran and the United States, with Oman acting as a mediator. The reopening of the strait, according to the source, would likely depend on U.S. actions and other conditions, making the current impasse all the more fragile.

A Narrow Path Forward

"We are close, but not there yet," the source said, emphasising that the remaining hurdles are not insurmountable but require careful handling. The source added that Iran remains committed to a diplomatic solution but reserves the right to secure its interests.

Meanwhile, shipping industry analysts are watching the situation closely. Any prolonged disruption to Hormuz traffic could have severe consequences for global energy markets, compound inflationary pressures, and destabilise an already volatile region. The earlier progress in talks had been seen as a potential breakthrough not only for oil flows but also for the broader U.S.–Iran–Oman relationship.

Efforts to reach Omani officials for comment were unsuccessful. The Iranian foreign ministry declined to elaborate beyond confirming that negotiations are ongoing.

Correction: A previous version of this article stated that the agreement had been finalised. That was incorrect. The strait remains closed to tanker traffic pending further negotiations.