Iran says Hormuz traffic may resume within weeks of agreement
(Bloomberg) – An unofficial draft of a U.S.-Iran interim peace deal says maritime traffic through the Strait of Hormuz can return to normal within a month of the agreement being finalized, according to Iranian state television.
It’s unclear how recent the document, reported by IRIB News and which excludes military vessels, is or whether the U.S. has agreed to the terms. The White House didn’t immediately respond to a Bloomberg request for comment.
Oil dropped on the report, with Brent falling almost 4% to below $96 a barrel. It’s declined more than 7% this week as traders become increasingly more optimistic there will be an agreement.
Other key points include the U.S. lifting its naval blockade on Iranian ports and the American navy leaving waters surrounding Iran.
The draft also says Iran and Oman will have a mechanism in place to oversee shipping in the strait. That’s one of the most contentious issues holding up a deal, with the U.S. saying vessels must be allowed free passage. Oman has not commented in recent weeks on Iran saying the two are in discussions about managing the strait.
Iran and the U.S. are negotiating to extend their ceasefire by around two months and reopen the vital Strait of Hormuz. Tehran’s effective closure of the waterway at the start of the war in February has sent oil and natural gas prices soaring and pushed up inflation globally.
Both Iran and the U.S. have said their talks, via mediators such as Pakistan and Qatar, are making progress. Marco Rubio, U.S. President Donald Trump’s secretary of state, said on Tuesday it would take a few more days to reach an agreement.
Tensions remain high and on Monday night the U.S. killed several Iranian soldiers in an attack on ships it said were laying mines near the strait. Iran fired back at American jets and said it downed an unmanned drone.
“Indirect contacts with the Americans are continuing,” Ali Bagheri-Kani, deputy secretary of Iran’s Supreme National Security Council, said on Wednesday in Russia, where he is attending a security forum. “Until we have agreed on all issues, we consider that we have agreed on nothing.”
“There is no doubt that the conditions for passage through the Strait of Hormuz and the procedure for doing so will not be the same as before,” said Bagheri-Kani. “A completely different procedure will be introduced. Iran and Oman, as neighboring coastal states, are holding talks to determine a new mechanism for passage through the Strait of Hormuz.”
The warring sides, who agreed to a fragile ceasefire in early April, also need to agree on what portion of Iranian financial assets will be unfrozen and how quickly. On Tuesday, Iranian state media said Tehran wants $12 billion unfrozen once the so-called memorandum of understanding—as the two sides are describing the interim deal—is agreed.
Iran hawks in the U.S., including Sen. Lindsey Graham, are likely to balk at that and pressure Trump to revert to bombing the country.
Another potential obstacle is a parallel war in Lebanon between Israel and Tehran-backed Hezbollah militants.
Israel has stepped up attacks in recent days and said its ground forces are moving further into its northern neighbor’s territory.
Israeli forces will go beyond a strip of land roughly 10 kilometers (6.2 miles) into the south of Lebanon, the military said. Israel has increased strikes elsewhere in the Arab country and killed the new head of the military wing of Hamas, another group allied with Tehran, in Gaza on Tuesday.
Iran insists the ceasefire has to cover “all fronts,” including Lebanon. Israel, which started the wider war when it bombed Iran alongside the U.S., is reluctant to accept any restrictions on its operations in its northern neighbor. It says its actions are necessary to protect its border communities and counter Hezbollah’s rockets and drones.
Hezbollah, classified as a terrorist organization by the U.S., has “crossed all red lines” with a surge of lethal drone attacks, Eli Cohen, a minister in Netanyahu’s security cabinet, told Israel’s Army Radio.
