Iran may drop its Hormuz fee demand to end the US blockade, but shipowners want more than a reopened strait

Donald Trump rejected Iran’s seven-day Hormuz proposal — and with it, any near-term answer to the question that matters most to shipping: Who controls traffic through the strait? Tehran is refusing to soften its conditions, and Foreign Minister Abbas Araghchi said yesterday that Iran will decide its next move once mediators convey a definitive US position, CBS News reports. The proposal closely tracked the Islamabad memorandum signed in June, which fell apart by July over that same control question.

The standoff is escalating in the meantime. Iran had offered to reopen the strait and restart nuclear talks within seven days if Washington lifted its naval blockade, waived sanctions on Iranian oil sales, and observed a ceasefire that included Lebanon.

The fee dispute had looked closer to a fix than the control question: Tehran was willing to shelve its demand for Hormuz transit fees if the US lifted its blockade, regional sources told Reuters last week, with the fee question going into a side attachment to the main agreement. Iran held firm on administrative control of the waterway, though, and one source said Tehran may defer the toll but won’t cede control of the strait.

Gulf states reject both: Gulf leaders told Trump in New York they won’t accept any Iranian control of Hormuz, the newswire reports. Saudi Foreign Minister Faisal bin Farhan went further at the UN General Assembly on Saturday, demanding a return to pre-28 February conditions in the strait with no fees or taxes.

Shipowners will judge the strait by its 10th transit

That puts the terms of passage at the center of the talks, as we flagged in August. Governments can declare a strait open while it stays closed to the owners, underwriters, and cargo interests who have to commit ships, crews, and capital to it, Wolfgang Lehmacher, former head of supply chain and transport industries at the World Economic Forum, tells EnterpriseAM. The test is the 10th transit after an agreement and whether each one follows the same rules.

Iranian clearance would bring its own risks for owners. Clearance by an authority Washington has sanctioned creates compliance risk for owners, charterers, and their banks, and London war cover can lapse if any transit charge is paid, Lehmacher says. The Lloyd’s Market Association has already advised underwriters not to cover shipowners against transit fees imposed by any party, Lloyd’s List Intelligence’s David Osler told us in August. “A strait you must ask permission to use is not open. It is licensed,” Lehmacher notes.

The Iranian authority’s blacklist adds another gate: Only 21 of the now-77 listed ships have kept transiting, Lehmacher says. The list already includes Adnoc-controlled vessels, so for shippers the question becomes who owns the ship as well as where it sails. Before returning, operators will want repeated safe transits on the recognized route, credible mine clearance, and cover they can buy, he adds.

Each phase of the agreement would remove a different obstacle. Released assets move money, not ships, and lifting the blockade mainly restores Iranian barrels, Lehmacher says. Everyone else needs underwriters willing to price the risk rather than refuse it, and that only comes with time without incident. In June, analysts reckoned trapped tonnage could clear within 10 days of unrestricted passage, he notes. Liner schedules would take longer because they follow ins., crew availability, and port rotations.

The ins. clock outruns the midterms

An agreement before the US midterms looks unlikely. Trump has said an agreement could come after the 3 November vote — though US officials separately told the WSJ he’s also weighing a return to bombing once the election is past, a position they described as still unsettled. Former US negotiator Dennis Ross puts the odds of one before it at 30%, arguing neither side wants to give up its leverage first.

Lehmacher expects owners to spend the pre-midterm window mostly securing their positions rather than sailing. Few will risk crews in an unsettled strait, he says, and underwriters may argue the strait was briefly passable at certain points during the war, or that June’s now-collapsed ceasefire restarted the clock — a reference to the 12-month “deprivation of use” threshold under which owners of trapped vessels can claim total-loss payouts. Charterers are seeking co-assured status under owners’ war policies, he adds. He expects meticulous records and few voluntary departures until the clock’s start date is settled.

Workarounds backed by long-term commitments will stay, Lehmacher says. DP World has an in-principle agreement for two Fujairah terminals under a 50-year concession, and Adnoc is fast-tracking a second pipeline to Fujairah. Rerouting through Oman, which one Omani executive estimates adds about a fifth to costs, and state-backed shuttles will shrink once ships can call directly, he says.