Hormuz glut: Iran proposes six sweeping demands to open chokepoint

Oil prices have moved higher after Tehran dashed hopes for a swift reopening of the Strait of Hormuz, demanding changes in Washington's foreign policy as a prerequisite.

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Tehran has issued a statement demanding six sweeping changes in Washington’s foreign policy, asserting that the Strait of Hormuz will remain shut until these conditions are met.

Iran will consider reopening the critical waterway after all six demands are met, the secretary of Iran's Supreme National Security Council Mohammad Baqer Zolghadr said in a statement.

The six demands include a total cessation of all US military action in the region, a permanent end to the conflict, immediate withdrawal of all US naval and air forces from the Persian Gulf, compensation for war damages, and withdrawal of all sanctions on Tehran and the release of all frozen Iranian assets.

The statement carries significant weight, pointing out that the US-Iran draft framework falls short of an actual agreement to unblock the vital waterway.

Brent’s price is trading close to $85/bbl mark, as market participants await Washington’s official reaction.

In contrast, the White House maintains a different outlook, with US Vice President JD Vance saying in an interview with Fox News that oil transit from the Gulf will eventually recover to pre-conflict volumes.

Meanwhile, the US Central Command (CENTCOM) has reiterated its control over the narrow lane that handled roughly one-fifth of global seaborne crude flows prior to the beginning of the conflict on 28 February. 

As of yesterday, the US CENTCOM has redirected 55 commercial vessels, disabled two, and boarded two, to prevent ships from entering or departing Iranian ports, it said on social media platform X.

Consequently, the market is caught between starkly contrasting viewpoints of the same dialogue. While Washington envisions a return to safe energy transit through the Hormuz chokepoint, Tehran insists on substantial political, military, and economic concessions.

Hormuz chokepoint still avoided

Only a handful vessels have attempted to transit the chokepoint, as commercial ships continued to come under attack over the weekend.

A fire broke out onboard a ship after it was struck by an unknown projectile on Saturday, about 18 nautical miles east of Khasab, Oman, according to the United Kingdom Maritime Trade Operations (UKMTO) agency.

Fifteen Abu Dhabi National Oil Company-affiliated (ADNOC) vessels have been hit by missiles since the beginning of the war, including three in the previous week, as the UAE’s state-owned oil company tries to keep crude oil flowing through the strait, Reuters reported.

Only 17 vessels crossed Hormuz yesterday, with six reportedly transiting with their Automated Identification System (AIS) turned off, maritime intelligence firm Windward reported. The slump comes despite hopes that Iran and Oman will sign an arrangement to jointly control the strait – reopening the shipping corridor.

Tehran has also weighed imposing restrictions on US- and Israeli-flagged vessels, compounding uncertainty alongside discussions regarding transit tolls.

“Oil prices remain supported by ongoing uncertainty around the Strait of Hormuz,” two analysts from ING Bank noted.

These assaults on merchant shipping have disrupted traffic through the vital corridor, propelled freight expenses upward, and made numerous operators hesitant to venture into the region.

By Aparupa Mazumder

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