Iran announced an imminent shipping agreement with Oman to manage the Strait of Hormuz, even as regional officials confirmed that Muscat had quietly rejected Tehran’s pitch for joint service fees. The diplomatic friction unfolds against a backdrop of ongoing US naval pressure and global market volatility.
Tehran Claims an Impending Deal While Muscat Pulls Back
Iran declared that an agreement with Oman to manage commercial shipping through the Strait of Hormuz was just days away according to Foreign Ministry Spokesman Esmail Baghaei. The understanding would establish a temporary safe route through the vital chokepoint and find documentation through the International Maritime Organization. Oil prices reversed gains on the news, with Brent crude down 0.1% to $96.15 a barrel after trading earlier at $97.93.
Yet that public optimism ran directly into diplomatic resistance behind closed doors. Regional officials revealed that Oman had quietly rejected Iran’s request to jointly charge service fees on commercial vessels navigating the waterway, declining to consent even on a voluntary basis for environmental and security services. The pushback directly contradicted a statement from Iran’s Islamic Revolutionary Guard Corps issued last week.
“Agreements have been reached regarding each country’s share of the strait’s waters as well as Iran and Oman’s share of its revenue.”
Hossein Mohebbi, IRGC spokesman
Despite the IRGC’s assertions, a US official noted that even Tehran had not finalized the proposed revenue-sharing terms prior to the announcement, indicating the IRGC jumped the gun. Iranian Foreign Minister Abbas Araghchi and Omani Foreign Minister Sayyid Badr Albusaidi met in Tehran last Tuesday to discuss the waterway, but Oman ultimately balked at the financial proposal in deference to broader regional peace efforts.
Washington’s Red Lines and the Threat of Force
The diplomatic maneuvering carries high stakes given the active American military posture in the region. President Donald Trump issued stark warnings regarding any attempt to impose tolls on the waterway when he stated on August 17:
“If Oman gets in the way, we’ll bomb the s–t out of them.”
Donald Trump, US President
A reimposed US naval blockade renders any de facto tolling arrangement unworkable without American consent. Bank of New Zealand senior markets strategist Jason Wong highlighted the precarious geopolitical dynamic in a note, stating that the US is not party to any agreement and noting Trump’s threats against Oman.
Oman has traditionally acted as a regional mediator, attempting to avert war by convening US-Iran nuclear talks following its role in arbitrating the release of Americans held by Yemen’s Iran-backed Houthi movement. Oman successfully brokered the May 2025 cease-fire between the US and the Houthis, who govern the north of Yemen, with that deal remaining in effect. Iran has attempted to pressure Oman, which borders the southern coast of the strait, into a post-war framework granting Tehran enhanced authority over the vital oil and gas bottleneck.
Treasury Targets UAE Hubs Amid Economic Pressure
As tensions persist over the waterway, the United Arab Emirates and its banking hubs used by Iran-linked figures are emerging as a renewed focus in Washington. Treasury Secretary Scott Bessent announced actions on Friday to cut off transactions with Banque Misr UAE and sanction the manager of Bank Melli’s Dubai branch for allegedly doing business with Iran. These steps follow the sanctioning of 154 other UAE-based entities over the past year.
The measures form part of Bessent’s Operation Economic Outcast,
which aims to force Iran to negotiate a peace deal through inflicting economic pain, with more targeting of UAE-based institutions expected. A Republican source criticized the dynamic to The Post, stating that the UAE needs to step up and is playing both sides by asking Trump to continue the conflict while simultaneously paying billions to the Iranians.
