Oman presents Iran with Gulf-backed plan for voluntary fees to use Hormuz

DUBAI >> Oman has presented Iran with a plan backed by Gulf states to manage the Strait of Hormuz, including collecting voluntary fees for using it, a Gulf source and a Western diplomat said today.

The Omani proposals are intended to serve as a basis to end the disruption to trade through the strait caused by the U.S.-Israeli war on Iran.

President Donald Trump, who abruptly called off a two-week U.S. bombing campaign over the weekend in his latest strategic U-turn, said there were “good talks” underway with Iran but threatened to restart strikes unless negotiations deliver.

Iran denies seeking to resume talks with the United States.

Washington launched its renewed bombing campaign earlier this month to break Iran’s grip on the strait, through which about a fifth of global oil and liquefied natural gas flowed before the war.

Iran effectively shut the strait to ships other than its own after the United States and Israel attacked on Feb. 28.

A deal last month between the United States and Iran partially reopened it, but the agreement collapsed in early July after Iran fired on ships using a channel it does not approve.

Iran has said it wants to manage the strait alongside Oman, which controls the opposite shore, and charge service fees to ships that use it.

Washington wants to return to the status quo prior to the war, when ships were able to pass freely with no payments, and says charging mandatory fees would be illegal.

Iran’s Deputy Foreign Minister Kazem Gharibabadi said Tehran had proposed to Oman that Iran managed one-way shipping through its side of the strait and Muscat managed part but not all of the opposite direction.

Under the Omani proposal, Iran would not exercise sole control and fees would be voluntary, the Gulf source and Western diplomat briefed on the matter said.

The system would be analogous to one in place on Asia’s Strait of Malacca, where Indonesia, Malaysia and Singapore ask ships to pay voluntary contributions to fund navigation, environmental protection and search-and-rescue operations.

The Western diplomat compared it to a voluntary carbon tax for flights, where anyone buying a plane ticket can choose to tick a box if they want to pay to offset their emissions.

Gulf Cooperation Council foreign ministers met via video call today to discuss the latest developments in the conflict, including ways to intensify cooperation on issues related to freedom and safety of vessels through the waterway, a statement from the Qatari Foreign Ministry said.

Iran’s joint military command again rejected a plan put forward by Trump for damages to vessels to be paid from frozen Iranian assets, state media reported. It said that any country or company that accepted such payments would be denied passage through the Strait of Hormuz by Iran’s armed forces.

Adding to the challenges for shipping in the region, the Iran-aligned Houthis in Yemen opened a new front against the U.S. and its allies on July 20, when they declared a blockade of Saudi ports on the Red Sea.

Late today, the Houthis said they had fired ballistic missiles at a Saudi oil tanker, which they said was forced to turn back.

Trump called off his latest campaign of airstrikes after receiving advice from military commanders that the strategy had run its course.

The 13 nights of renewed U.S. bombing killed scores in Iran and destroyed bridges and tunnels across the south as well as military targets.

Iran had responded with attacks on U.S. bases in neighboring countries that killed four service members, and strikes on civil infrastructure in Gulf states that it said were in response to U.S. strikes on civilian targets. Iran has said it would hold fire as long as Washington does.

But drone attacks were reported in Jordan, Saudi Arabia and northern Iran on Monday, and Jordan reported another drone being downed today.

In an interview with Fox News today ahead of a meeting with Israeli Prime Minister Benjamin Netanyahu in Washington, Trump said the U.S. was in a strong position right now. He reiterated he was prepared to strike more Iranian targets, but said he would prefer to avoid doing so.

“I think about 91 million people without power, without bridges, would have to live, and it’s a very, very delicate balance. So I think we have a very strong position right now, they know I’m going to do that if they don’t make a deal.”

Trump also repeated a threat to potentially target Iran’s Pickaxe Mountain, a fortified facility buried deep underground near one of Tehran’s main nuclear sites, saying: “If we don’t make a deal we’ll take it out very easily.”

Iran says it has not sought any new negotiations with the United States, which it accuses of violating the agreement reached last month on a framework for talks to end the war. Trump meets Netanyahu amid strained relations between the two leaders. Israel was involved in the initial bombing campaign but has not been part of subsequent peace talks.

The end of the U.S. bombing campaign over the weekend sent oil prices tumbling by around 8% on Monday, and the fall continued today. Brent crude futures were down around 1.6% at close to $87 a barrel by mid-morning today.

Washington and Tehran reached an agreement in June on a framework for talks meant to take place by the end of August to resolve major issues such as Iran’s nuclear program.