Iran is reported to be nearing a deal with Oman over control of the Strait of Hormuz — the waterway the two countries share, and through which a very large share of the world’s seaborne oil and gas passes.

If it holds, it would be a significant change. It is also worth understanding why Oman, of all countries, is the one at the table.

The strait belongs to two countries

The Strait of Hormuz is narrow enough that there is no corridor of international water down the middle. Every vessel passing through is in the territorial sea of either Iran or Oman.

The shipping lanes themselves run largely through Omani waters, around the Musandam peninsula — a piece of Omani territory separated from the rest of the country by the United Arab Emirates.

So Oman is not a neutral third party being brought in to mediate. It is one of the two states whose waters the strait consists of, and it has a direct legal interest in what happens there.

Why Oman can talk to Iran

Oman occupies an unusual position in the Gulf. It has maintained working relations with Iran through decades in which most of its neighbours did not, while remaining on good terms with Western governments and hosting British and American military cooperation.

That has made it the region’s habitual back channel. Oman has hosted or facilitated talks between adversaries repeatedly, including in the negotiations that led to the 2015 nuclear agreement.

Its foreign policy is generally described as one of studied non-alignment: it avoids taking sides in regional confrontations, which costs it influence in some quarters and buys it access others cannot obtain.

What “control” could mean

The reported wording is vague, and that vagueness is worth flagging rather than filling in.

Under the law of the sea, ships have a right of transit passage through international straits that bordering states may not suspend — we set out that framework in can a country legally close a strait? An arrangement in which two states agree to jointly manage traffic is compatible with that. An arrangement in which they agree who may pass is not.

Which of those is being negotiated cannot be determined from the reports so far. Nor is it clear whether this is a maritime-management agreement, a de-escalation understanding, or a step in the wider negotiations over sanctions and the blockade.

What it would mean economically

The commercial effect of a credible agreement would arrive before any additional cargo moved.

Shipping costs in the strait are currently driven by war-risk insurance premiums and by owners’ willingness to send crews through. Both respond to expectations. An agreement that persuaded insurers the risk had fallen would reduce premiums, which would reduce the cost of every cargo, which would eventually show up in fuel and gas prices far from the Gulf.

The reverse is also true. Deals that are announced and then unravel produce a spike worse than no announcement at all.

What to watch

Whether either government confirms the reports officially. Whether the text, if there is one, is published. Whether attacks on shipping stop. And — the least dramatic and most reliable indicator — whether war-risk premiums for the strait begin to fall.

Insurers are paid to be sceptical. When they move, something has actually changed.

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Source: Democracy Now! headlines, 12 August 2026. Background on the legal status of international straits from the UN Convention on the Law of the Sea.