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Iran is moving to formalize its grip on one of the world’s most consequential waterways. The country plans to declare a restricted zone outside the Strait of Hormuz and impose sanctions on any vessel that enters without authorization.
The Strait of Hormuz is the narrow passage between Iran and Oman through which roughly 20% of the world’s oil and liquefied natural gas travels.
What Iran is actually building here
Tehran has established a new body called the Persian Gulf Strait Authority, which is working alongside the Islamic Revolutionary Guard Corps Navy to enforce stricter transit rules. The supervisory zone has expanded to cover an area described as ten times wider than before, stretching from Kuh-e Mobarak in Iran to southern Fujairah in the UAE.
Under the new framework, only routes specifically designated by Iranian authorities are permitted. All others are off-limits, and ships are required to maintain active contact with Iranian naval forces while in transit.
Iran has already issued turn-back orders and reported incidents involving tankers that used unapproved routes in June 2026.
These developments are unfolding against the backdrop of fragile post-conflict negotiations following hostilities between the United States and Israel that began on February 28, 2026.
Iran rejects outside alternatives
Both Oman and the International Maritime Organization proposed alternative shipping corridors to ease the pressure on commercial traffic. Iran rejected them. The IRGC described those proposals in June 2026 as “unacceptable and dangerous.”
Talks with Oman have produced some movement. The two countries reached agreements for temporary shipping corridors under joint management, but full access is contingent on broader geopolitical concessions, including US acceptance of Iran’s oversight terms.
What this means for oil markets and global shipping
Shipping traffic through the strait has fallen below pre-conflict levels, and oil prices have risen in response to the tightening of access. Insurance premiums for vessels transiting the region have climbed as underwriters price in the elevated risk of enforcement incidents.
The stakes extend beyond the oil market. LNG shipments from Qatar, one of the world’s largest exporters of the fuel, also transit the strait. European buyers who pivoted toward Qatari LNG after Russian supply disruptions are now exposed to a second geopolitical chokepoint risk.
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