The Iran Deal Is Hazy on Hormuz

But while the 14-point memorandum of understanding that both countries signed includes language about the reopening of the strait and the resumption of prewar shipping traffic, the language is very vague. It remains unclear how soon normal transits in one of the world’s most important chokepoints will resume, and the stakes remain high: Oil prices have fallen far off their wartime highs, but they are sticky and likely to remain so as inventories dwindle and tankers dawdle.

Start with the MOU itself. There are two main articles that deal with the strait and shipping. The important one is Article 5, which says that with the signing of the MOU, Iran “will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only.” Then it starts getting confusing.

“The traffic of commercial vessels will immediately start, and considering the need for removing the technical and military obstacles and demining by the Islamic Republic of Iran, will be instated within 30 days,” the article continues. 

And what will be the future traffic regime in the strait? The Trump administration has always insisted that Hormuz will return to a fully free and open status, while Tehran has already set up an entire body to administer transit fees, with intentions to explicitly earmark a chunk of the proceeds for the Islamic Revolutionary Guard Corps. But that’s not what the MOU says. 

“Iran will conduct dialogue with the Sultanate of Oman to define the future administration and maritime services in the Strait of Hormuz in discussion with other Persian Gulf littoral states in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz,” Article 5 concludes.

This seems to suggest that any mine clearance operations—and big shipping associations are convinced that Iran scattered some mines in the main Hormuz channel—are up to Iran, even though the United States and European countries have some mine clearance capability. The MOU also seems to suggest that mine clearance is a one-month job, whereas the U.S. Defense Department told Congress that could take six months.

The MOU also seems to suggest that Iran will allow toll-free transit of Hormuz during the 60 days of follow-on talks but after that may seek to craft a novel and alternate transit regime. Those two issues—mines and fines—are what have big shippers worked up.

“The central part of the strait is mined and un-navigable, and only the inshore traffic zones close to Oman and Iran are reportedly free of mines,” Jakob Larsen, the chief safety and security officer at the Baltic and International Maritime Council, or Bimco, said in a statement on June 18. “Due to the risk of congestion and navigational incidents in the inshore traffic zones, we still consider it risky for ships to commence transits at this point.”

Intertanko “is calling for urgent clarity on the practical steps needed to support the safe transit of vessels through the Strait of Hormuz,” the International Association of Independent Tanker Owners said in a June 18 release. While the group welcomed the U.S.-Iran agreement, it added that “shipowners need certainty about the practical steps to ensure the safety of navigation and the security of seafarers.”

The future of transits in the strait—whether it reverts to genuinely free passage or whether Iran sets up some sort of toll booth after all—is another concern of the big shippers.

“Article 5 of the MoU states that no tolls will be charged for the first 60 days; however, the future is unclear and will be determined by Iran following dialogue with Oman and discussions with the Gulf states,” Phillip Belcher, Intertanko’s marine director, said in that same release. “The final outcome of these discussions must be a reinforcement of the central tenet that the Strait of Hormuz must remain free of charges and open to all in accordance with” the U.N. Convention on the Law of the Sea.

If the Law of the Sea (which neither the United States nor Iran ever ratified) is the final word, or even the preceding 1958 Geneva Conventions on the same, then the answer seems pretty clear.

“When you have a narrow waterway, it is an international strait, and everybody has to be able to transit without any hindrance,” said Kristina Siig, an expert in maritime law at Aalborg University in Denmark. “Coastal states can impose regulations but no fees,” she said, recalling that Denmark got rid of tolls in the Danish Strait in the middle of the 19th century, long before the international treaties that made it obligatory. (She noted that the same prohibitions apply to the Trump administration’s reported plans to charge fees for expedited, escorted passage through Hormuz. “No, no, no, no, no, that’s not legal,” she said.)

All that said, some traffic was already moving into, out of, and toward the Strait of Hormuz even before the MOU’s signing. 

On Wednesday, some 26 ships transited the strait, with traffic equally split between inbound and outbound journeys, according to Windward, a maritime intelligence firm. Granted, only about one-third of the vessels were tankers, and that number still represents just a fraction of prewar traffic in Hormuz, but it is busier than at almost any time since the first days of the war. (The other two-thirds were a mix of cargo ships and bulk carriers.)

There are other indications, too. Saudi tankers have reportedly shown up outside the strait, taking oil from storage to customers in Asia. Qatari tankers built to carry liquefied natural gas are sailing back to the Persian Gulf to load up and restart exports after months of a war-induced pause. And Iranian tankers, which slipped through the U.S. blockade on a regular basis, are now free to continue to do so, with the U.S. military announcing on Thursday that the blockade is lifted. 

But for traffic to resume to anything like prewar levels, when well over 100 ships would sail through the strait every day, ship owners stress that the most important thing is to restore full confidence in the regular, two-way, deep-water channel in the middle of the strait, rather than relying on the narrow, tricky, and traffic-limited channels skirting the Omani and Iranian coasts that currently serve as safety valves for the Persian Gulf. (“If 550 ships are aiming to leave and a likely 60 ships per day would look to transit the Strait of Hormuz, then the existing routes are inadequate to handle this,” Intertanko noted.)

“Ships trapped in the Persian Gulf will be interested in leaving as soon as it is safe to do so, but this must be done in a coordinated manner due to the confined nature of the strait,” Larsen of Bimco said in Thursday’s statement.