Iran wants to close a U.S. Navy-protected shipping lane through Omani waters that has allowed Persian Gulf oil and gas tankers to leave the Strait of Hormuz without Tehran’s permission.
The Islamic Republic this week sought to impose its control over Hormuz by attacking three tankers sailing through the strait through U.S.-protected shipping lanes. The attacks have pushed Washington and the Iranian government to the brink of a new war as they exchange attacks across the Gulf.
Analysts at maritime intelligence firm Windward said in a note that this week’s fighting marks “the most significant escalation of the conflict since the early stages of the conflict” in late February and early March.
Michel Wiese Bockmann, senior maritime intelligence analyst at Windward, said Iran is losing control of the strait as the southern corridor off Oman’s coast is expanded with U.S. military support. Bockman said America’s Gulf allies export oil and gas through that southern route.
“Iran no longer has the ability to close the Strait of Hormuz,” U.S. Energy Secretary Chris Wright said at a news conference in New York City on June 24. “This is their key leverage, and we will take that leverage away from them.”
US officials told reporters on June 17 that military escorts were allowing between 5 million and 8 million barrels a day to leave Hormuz. Exports through the strait have increased, but remain well below the 20 million barrels of oil and products per day that passed through Hormuz before the war.
Under a tentative agreement with the United States, Iran has promised safe passage for commercial ships passing through Hormuz and agreed not to collect tolls for 60 days. In return, the United States lifted its naval blockade against Iran and temporarily lifted sanctions on oil sales.
But in the three weeks since the deal, Iran has maintained that ships have the right to safe passage only if they use the northern route through Iranian territorial waters.
This week’s tanker attacks are “part of a series of sporadic targeted operations by Iran aimed at destabilizing the Southern Corridor and sending a message to Gulf producers that they will not send oil through the Northern Corridor,” Bockman said.
The Iranians point to Clause 5 of the agreement, which states that Tehran will “use its best efforts to coordinate” to ensure safe passage. The specific route remained undefined. The agreement also states that future management of the strait will be determined by Iran and Oman in consultation with other Gulf states.
“The fundamental problem here is that the memorandum does not reach an understanding on the management of shipping traffic through the straits. It essentially undermines that issue,” said David Goldwyn, who served as the State Department’s special envoy for international energy issues under President Barack Obama.
Iran’s Revolutionary Guards warned on Thursday that the US military’s “interference in determining maritime traffic routes will not only be met with a firm response, but will also seriously disrupt the gradual reopening process and seriously endanger the interests of countries using the Strait of Hormuz.”
The United States has reinstated oil sanctions on Iran and President Donald Trump has threatened to reimpose a U.S. naval blockade following the tanker attack. Iran’s Foreign Ministry said this week that reimposing oil sanctions was a “serious violation” of the memorandum of understanding.
The ministry said in a statement that Iran “holds the U.S. government fully responsible for the consequences of any violation of this commitment.” The US Energy Secretary insisted last month that the US intends to keep the strait open with or without a deal.
“With the U.S. military and some of the things we have developed, we can guarantee that energy will flow out of the Gulf, regardless of whether there is a deal with Iran or not,” Wright said on June 24.
James Kraska, an expert on international maritime law at the U.S. Naval War College, said that under international law Iran is not allowed to restrict traffic through Hormuz. Kraska said the international community has an “unsuspended right” to transit through the strait without any hindrance.
However, Iranian tanker attacks have affected traffic flow through Hormuz. Ship operators are favoring the Iranian route through a corridor along the Omani coast, adding to the fallout from tanker attacks earlier this week, according to trade information firm Kupler.
“We’re back to where we were before the memorandum, which is that the Iranians threaten authorized non-Iranian traffic, and the United States cannot use military means to open the Straits to free navigation,” Goldwyn said.
“Therefore, the only options are either to completely close the strait through a blockade or to launch a limited military attack against Iran in violation of the agreement,” he said.
Oil prices rose more than 4% this week following recent hostilities. U.S. crude oil was trading around $71 a barrel on Friday, while international benchmark Brent crude was trading at just under $76. The price is well below Brent’s wartime high of about $122 per barrel.
If the U.S. reimposes a blockade, Goldwyn said, oil prices would likely rise further as 1.5 million barrels of Iranian exports would be taken off the market.
But Kraska said Iran’s efforts to take control of Hormuz are likely not sustainable in the long term. He said this would set a dangerous precedent that could be repeated in other trade chokepoints.
China and Russia, for example, are interested in ensuring that precedents are not repeated in the Straits of Malacca and Denmark, which lead to the Baltic Sea, analysts said.
Iran also risks stretching its arms too far and creating incentives for Gulf producers to divert to alternative routes, such as pipelines through Saudi Arabia or the United Arab Emirates, Kraska said.
“In the long run, Iran’s trade space is shrinking,” he said.
