A critical change in the draft agreement between the U.S. and Iran could reshape control over the world's most important oil waterway, the Strait of Hormuz.
The latest version of the memorandum of understanding (MOU) now reportedly "explicitly emphasizes" the joint sovereignty of Iran and Oman over the strait. This might sound like a small change in wording, but its implications are significant. It reframes the deal from a simple logistical agreement to reopen the strait into a new governance model centered on the coastal states.
So, why this sudden shift? It's the result of a calculated push by Iran over the past several weeks. First, Iran has been asserting its authority more forcefully. In early June, a top official declared Iran and Oman the "sole sovereigns" of the waterway. This followed actions in May, where Iran published new maritime maps claiming wider jurisdiction and established a new authority to create a "controlled maritime zone." This built domestic and international pressure to have their sovereignty recognized in any deal.
Second, the international political landscape gave Iran more leverage. A UN Security Council resolution to create an international force to protect shipping was vetoed by China and Russia in April. This took a multilateral solution off the table, forcing the U.S. into a direct negotiation where Iran's control over the physical strait was a powerful bargaining chip.
The core of the issue lies in a legal distinction. Most of the world operates under the principle of "transit passage," which guarantees ships the right to sail through international straits like Hormuz without interference. Iran, however, argues that since the strait is within its and Oman's territorial waters, they have sovereign rights to manage it. The new wording favors Iran's interpretation.
This has direct consequences for the global economy. For months, tensions have driven up shipping insurance costs, with war-risk premiums soaring. An agreement is needed to bring them down. However, if "joint sovereignty" means ships could face new rules, inspections, or even fees, the financial relief might not materialize. The difference between a guaranteed "toll-free" passage and a "managed" one is worth millions of dollars per voyage for a single supertanker.
Ultimately, the final text of the agreement, expected to be signed soon, will be crucial. If it includes strong, explicit guarantees for unimpeded, non-discriminatory, and toll-free passage, the sovereignty clause might just be a diplomatic concession. Without those guarantees, the world could be looking at a new reality where passage through this vital artery is subject to the will of Tehran and Muscat.
- Glossary
- Transit Passage: A right under international law that allows for the free and continuous navigation of vessels through straits used for international navigation.
- Coastal State Sovereignty: The authority a nation has over its territorial waters, which generally extend 12 nautical miles from its coastline.