LONDON, Aug 6 (Reuters) — A proposed agreement between Iran and Oman to allow Tehran control over vessels entering the Gulf through the Strait of Hormuz faces challenges due to U.S. sanctions and strict insurance conditions on any payments, according to four industry sources.
Before the U.S.-Israeli airstrikes at the end of February triggered conflict in Iran, the Strait of Hormuz had been the main passage for about 20% of the world's oil and other essential goods, available to all ships without any fees.
Control of this strait has become the primary hurdle in resolving the ongoing conflict.
The latest proposal suggests that Tehran could intervene with any incoming vessels, while outgoing ships would follow a route between Iran and Oman, obtaining clearance through Oman after informing Iran, according to a senior Iranian source.
The world's leading shipping associations emphasized in an open letter this week that the ability for merchant vessels to navigate international waters "safely, predictably, and without unnecessary obstacles" is crucial for strong supply chains, economic stability, and energy security.
‘A TOLL IN ALL BUT NAME’
The introduction of mandatory charges for transit or service fees through the strait would effectively be "a toll in all but name," the letter stated, which was directed to the UN’s shipping agency.
This move could set a precedent that threatens the internationally recognized legal framework governing straits used for international navigation.
A two-way traffic separation scheme was established by the UN’s shipping agency in 1968 with the agreement of regional countries, creating the current routing system that divides sailing corridors within Iranian and Omani waters.
According to a senior Iranian official, Iran is seeking fees of between 5% and 7% based on the value of cargoes for ships using the strait, while Oman is proposing fees around 3%. Meanwhile, the U.S. advocates for no fees at all.
The UN’s International Maritime Organization stated it could not comment on the proposals at this time.
FEES WOULD CREATE COMPLIANCE ISSUES
For shipping companies and oil traders, the implementation of any fees leads to significant compliance challenges due to existing U.S. sanctions on the Persian Gulf Strait Authority, which Iran established to manage the waterway.
Additionally, the U.S. Treasury has prohibited U.S. individuals from receiving any services from the Iranian government related to "guarantee of safe passage."
Industry sources noted that any payments could lead to asset freezes. They chose not to be named because of the sensitive nature of the discussions.
Adding to the complexity, the Lloyd’s Market Association introduced a clause in late July that voids insurance coverage for a vessel if it has paid a transit fee, toll, or other charges for passage through the Strait of Hormuz.
Vessels navigating through the strait are required to pay an additional war risk premium to ensure coverage against damage during transit.
According to the LMA, “Under the clause, insurers have no liability to indemnify any such payment and are released from obligations concerning the relevant vessel if such a payment has been made.”
The LMA represents the interests of all underwriting businesses within the Lloyd’s of London insurance market.
An insurance industry source highlighted that shipping companies find themselves in a "catch 22" situation, as the wording from the LMA prevents insurers from covering shipowners who comply with Iran’s toll charges.