Key facts
- Iran's IRGC declared the Strait of Hormuz will remain closed until the U.S. meets all of Tehran's demands.
- Vessel traffic through the Strait of Hormuz has decreased significantly this week.
- Iran has proposed banning U.S. and Israeli ships from transiting the Strait.
- Oman is mediating discussions between Iran and the U.S.
- Oil prices rose, with Brent Crude topping $83 per barrel, following a Houthi attack in Saudi Arabia.
Iran's Revolutionary Guard Corps (IRGC) has declared that the Strait of Hormuz will remain closed until the United States accepts all of Tehran's demands. IRGC spokesperson Hossein Mohebi stated that the strait is currently a 'theatre of war' for Iran until its conditions are met. These demands, previously detailed by Iran's Supreme National Security Council secretary Mohammad Bagher Zolghadr, include an end to U.S. threats and sanctions, withdrawal of military forces, lifting of naval blockades, compensation for war damages, and the unconditional release of frozen assets.
Vessel traffic through the Strait of Hormuz has declined this week amid uncertainty about U.S.-Iran talks and the potential reopening of the Middle East’s key oil and LNG chokepoint. Between Monday and Thursday, 33 vessels transited the Strait, down from 50 for the same days last week, according to ship-tracking data. Only six crude oil tankers have managed to clear the Strait outbound so far this week.
Analysts noted that threats to shipping in the Gulf and the Red Sea have escalated to the worst safety situation since the Iran war began. Iran has signaled a much more restrictive regime for vessel traffic than previously thought, with proposals under review at its parliament to ban U.S. and Israeli ships from transiting the Strait, while other nations that Tehran deems have harmed it would pay compensation for moving through Hormuz.
Oman is mediating discussions between Iran and the U.S., describing the talks as positive and constructive while condemning attacks on commercial shipping. However, the market hopes of U.S.-Iran talks and an Iran-Oman deal on the management of the Strait of Hormuz appear to be dwindling. ING's commodities strategists warned that "Despite clear signs of progress in recent days, the tenor of the rhetoric and growing distrust between the US and Iran mean things could go from bad to worse once again."
In Friday trade, oil prices jumped with Brent Crude topping $83 per barrel, after the Iran-aligned Houthis in Yemen struck Saudi Arabia’s southern province of Najran in the latest flare-up of Middle Eastern hostilities, killing 11 civilians. Ayatollah Amoli Larijani, head of Iran’s Expediency Council, stated that Iran will defend its position in the Strait of Hormuz “at any cost.”