Iranian state media published a draft plan for the Strait of Hormuz last week that would ban U.S. and Israeli ships from transiting the Strait of Hormuz and charge compensation from other countries deemed “hostile” to Iran, in addition to other maximalist Iranian war demands.
The plan, which flies in the face of U.S. insistence that the waterway be open and free to international shipping, was made public after reports that Iran and Oman were edging toward a deal on jointly managing the Strait of Hormuz by establishing temporary north and southbound routes that Iran and Oman would administer.
The new Iranian demands, which are framed as prerequisites to fully reopening the Strait beyond the proposed shipping routes, raise questions over Muscat’s ability to carve out its own role in the Strait while mediating between U.S. and Iranian demands.
The sultanate wants a formal, direct stake in the governance of the world’s most contested waterway once the war ends. And it wants its share of any fees tankers have to pay for passage that was free until the war started in February. The U.S. seeks to preserve free passage but the memorandum of understanding it signed in June barred fees for just 60 days and left it up to Iran and Oman to “define the future administration” of the strait.
A U.S. official told MBN earlier this month that Washington would not accept any arrangement in the Strait of Hormuz that requires permits, imposes transit fees or grants any party control over commercial shipping. Before the war, Hormuz transported up to a fourth of the world’s total petroleum trade.
Where Talks Stand Now
Iran and Oman, between which the contested waterway passes, have been negotiating for weeks but the outcome of the talks remains unclear. Iranian Foreign Minister Abbas Araghchi said Aug. 1 that talks with Oman over the strait were entering their “final stages.”
Iranian Foreign Ministry spokesman Esmail Baghaei said Tehran and Muscat were close to agreeing on an entirely new maritime route through the Strait of Hormuz, different from the corridors that existed before the war. Iranian officials said the arrangement would include a “service fee” split between Iran and Oman.
Oman’s own proposal, meanwhile, has reportedly drawn on the model used in the Strait of Malacca, which connects the Indian Ocean to the South China Sea. There ships pay voluntary fees to a regional mechanism rather than mandatory tolls to a single state.
Such a structure would avoid Iran gaining sole control over the waterway. But given Iran’s stated position, Oman’s public advocacy of such a plan suggests the two sides are far apart, even as the diplomatic language suggests convergence.
How Oman Got a Seat at the Table
Whatever the outcome on the Hormuz agreement, the crisis over the strait has given Oman an expanded role in the region, according to Abdullah Baaboud, an Omani academic specializing in international relations and Gulf and Middle East Affairs.
“The sultanate hosted rounds of U.S.-Iranian talks and then continued its diplomatic contacts after the outbreak of the war, calling for a ceasefire and a return to negotiations,” he said. “Its role has also gradually moved from mediating on the nuclear and political issues to discussing issues related to regional security, foremost of which is ensuring the smooth flow of navigation in the Strait of Hormuz.”
That shift reflects a diplomatic model Oman has spent decades building, according to Ahmed Al-Shizawi, an Omani journalist and political analyst. Muscat is “no longer seen as a party to conflicts, but as a space for dialogue and a bridge for communication when other channels stall,” he said.
What Does Oman Want?
Although Oman is trying to reconcile the red lines Iran and the U.S. have imposed on future administration of the Strait, the sultanate has its own vital interest to look after.
Hormuz is crucial to Oman’s security and economic interests, Baaboud said.
“Oman is a littoral state, and an important part of its shipping lanes lies within its territorial waters,” he said. “It is not possible to build a practical and sustainable navigation system without their participation.”
Omani economist Khalfan al-Touqi told MBN that alternative routes in the Gulf have benefited Oman, including the UAE’s so called green corridors that provide land-based access to some of Oman’s ports, bypassing parts of the strait.
“This gave Omani ports an advantage and movement that did not exist before, and these corridors were inaugurated due to the current circumstance,” al-Touqi said. “This has also opened prospects for traders to think of Oman as a future hub, an alternative, or at least one of the alternatives,” al-Touqi said.
Muscat’s interests, however, go beyond the influence it is likely able to bring to bear over a waterway at the center of hard-power warfare.
“Omani influence is primarily the influence of access, trust and agenda-shaping, not the influence of force or coercion,” Baaboud said. “Muscat can open doors, convey messages, converge positions, and propose compromises, but it cannot force Washington or Tehran to accept an agreement on its own.”
This was seen in late July, when Oman proposed jointly overseeing the Strait of Hormuz with Iran — a 50-50 split of control over the world’s most contested waterway.
Tehran rejected it within days, countering a plan that would instead leave Muscat managing only a fraction of the lane it had proposed for itself.
Tehran has also militarily undermined Oman’s role in administering the Strait. Iran has attacked ships transiting Hormuz through Omani waters.
What Could Omani Administration Look Like?
According to Baaboud, Oman’s potential role spans several fronts.
Oman could take a role to ensure any arrangement complies with international navigation law rather than becoming political leverage, to handling practical coordination over Hormuz.
Diplomatically, he said, Muscat could bridge Iranian demands for control over the strait’s security with U.S. insistence on free passage, potentially anchoring that role by hosting a regional hub for maritime security coordination and serving as a communication channel to prevent accidents between Iranian and Western forces.
Ideally, Oman would try to reconcile the US and Iranian demands over the Strait’s management, preferring multilateralism rather than Omani and Iranian control.
“[Oman would aim to] reconcile Iranian demands for greater freedom in managing the security of the Strait, with the American and Western demands to guarantee freedom of navigation and no fees for mere transit,” Baaboud said.
Fees as the Pressure Point
The sharpest pressure point is over fees. Any arrangement that lets Iran charge for mere transit risks looking like recognition of Iranian control over the strait — a red line for Washington that could put Oman itself under U.S. and Western scrutiny.
Any Omani involvement in the implementation of any kind of fee over transiting the Strait could invite pressure from the United States.
Muscat risks American and Western pressure if arrangements are read as “recognition of Iran’s right to sole control of the strait” or as “mandatory fees for mere transit,” according to Baaboud.
President Donald Trump said earlier this month that Washington would hold off on new strikes against Iran in hopes of a quick deal, framing it as Tehran’s “last chance” to sign an agreement — even as Iran publicly denied any active negotiation with the U.S. directly, insisting instead that its only active talks are with Oman over Hormuz.
It remains to be seen if Oman’s bet that trust built over years of quiet mediation can be converted into something more durable, such as a formal, recognized stake in how one of the world’s most vital waterways is governed.
