Iran wants to close a US Navy-protected shipping lane in Oman waters that has allowed oil and gas tankers in the Persian Gulf to exit the Strait of Hormuz without seeking Tehran’s permission.
The Islamic Republic tried to force control of Hormuz this week by attacking three tanks patrolling the US-protected route. The attack has pushed Washington and Tehran to the brink of renewed war as they trade strikes across the Gulf.
This week’s war represents the “biggest escalation of tensions since the opening” in late February and early March, analysts at maritime intelligence firm Windward said.
Iran is no longer able to control the strait as the southern corridor off the coast of Oman expands with the support of the US military, said Michelle Wiese Bockmann, senior maritime intelligence analyst at Windward. US Gulf partners export their oil and gas through that southern route, Bockmann said.
“Iran will not have the ability to close the Strait of Hormuz going forward,” US Energy Secretary Chris Wright said at a conference in New York City on June 24. “That is their key opportunity and we are taking away that ability.”
Senior US officials told reporters on June 17 that military escorts allowed between 5 million barrels per day and 8 million barrels per day to leave Hormuz. While exports through the strait have increased, it is still less than the 20 million bpd of oil and products that passed through Hormuz before the war.
Under the interim agreement with the US, Iran promised safe passage for commercial ships through Hormuz and agreed to waive tolls for 60 days. In exchange, the US lifted its embargo on Iran’s naval vessels and temporarily lifted sanctions on its oil exports.
But Tehran has insisted in the three weeks since the accord that ships have a right of safe passage only if they use the northern route through Iranian waters.
This week’s tanker attack is “part of an intermittent campaign by Iran to destroy this southern corridor and send a message to Gulf State producers not to send their oil through that northern corridor,” Bockmann said.
The Iranians point to the fifth clause of the agreement which states that Tehran will “make arrangements using its best efforts” to ensure safe passage. Some routes have been left undefined. The agreement also states that the future management of the strait will be defined by Iran and Oman in consultation with other Gulf states.
“The problem here is that the memorandum of understanding did not reach an understanding about the management of shipping through the strait. It basically put that problem,” said David Goldwyn, who served as the State Department’s special envoy for international energy affairs under President Barack Obama.
Iran’s Revolutionary Guard warned on Thursday that “the US military’s interference in determining maritime traffic routes will not only be met with our decisive response, but will also severely disrupt the gradual reopening process and put the interests of countries using the Strait of Hormuz at great risk.”
The US has reimposed oil sanctions on Iran and President Donald Trump has threatened to further block American shipping because of tanker attacks. Iran’s Foreign Ministry said this week that reinstating oil sanctions was a “significant violation” of the memorandum of understanding.
Tehran “holds the United States Government fully responsible for the consequences of this breach of commitment,” the department said in a statement. The US Energy Secretary stressed last month that Washington would remain open with or without a deal.
“With the US military and some of the things we have developed, we can ensure the flow of energy in the Gulf with or without an agreement with Iran,” Wright said on June 24.
Under international law, Iran is not allowed to control traffic through Hormuz, said James Kraska, an international maritime law expert at the US Naval War College. The international community has an “indefinite right” to pass through the road unhindered, Kraska said.
But the Iranian tank attack is affecting the traffic flow in Hormuz. Ship operators favor Iran’s route through a corridor off the coast of Oman, reinforcing the impact of a tanker attack earlier this week, according to intelligence firm Kpler.
“We’re back to where we were before the deal, which is that the Iranians threaten any non-Iranian supply of vehicles and the US can’t open a free passage through military means,” Goldwyn said.
“So its only choice is to close the strait completely through a blockade or use limited military strikes on Iran in violation of the agreement,” he said.
Oil prices have risen more than 4% this week in response to the latest conflicts. US crude was trading around $71 a barrel on Friday while Brent, the international benchmark, was trading just below $76. Prices are well below the Brent war level of around $122 per barrel.
If the US reinstates the embargo, oil prices will rise significantly because it will take 1.5 million bpd of Iranian exports off the market, Goldwyn said.
But Iran’s efforts to control Hormuz may not be possible in the long term, Kraska said. It will set a dangerous precedent that can be repeated at other trading points, he said.
China and Russia, for example, are interested in ensuring that this does not happen again in the Strait of Malacca or the Danish Straits that connect to the Baltic Sea, the analyst said.
Iran also risks overplaying its hand and creating an incentive for Gulf producers to redirect flows to other routes such as pipelines through Saudi Arabia and the United Arab Emirates, Kraska said.
“For a long time, Iran is reducing its trading space,” he said.
