Iran said Monday that it is preparing to sign an agreement with Oman establishing a new shipping corridor through the Strait of Hormuz under Iranian control, with vessels required to coordinate with Tehran to enter a new restricted maritime zone around the critical oil chokepoint.

Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said the restricted zone would extend from the U.S. naval blockade line through Hormuz and into the Persian Gulf. Ships entering the zone to transit the strait without coordinating with Iran would be placed on Tehran's sanctions list.

Iran and Oman have been negotiating a temporary corridor for weeks, with earlier proposals dividing responsibility for traffic between the two countries. The latest proposal, however, says Iran would manage the corridor in coordination with Oman. Lloyd's List reported Monday that the International Maritime Organization had not yet received an official proposal. The UN shipping body would normally be the channel for notifying mariners of any new traffic scheme or restricted zone, and the absence of a formal IMO filing leaves the legal status of the proposed corridor unresolved under international maritime law.

U.S. forces struck three Iranian oil tankers over the weekend after Iran fired ballistic missiles at two U.S. warships, pushing the maritime conflict directly into the oil trade. Iranian forces have also targeted commercial vessels Tehran says were using unauthorized routes, while traffic through Hormuz has fallen to its lowest level since May, according to Reuters. The strait normally handles roughly a fifth of the world's oil trade, so even partial disruption there carries consequences for global supply chains far beyond the Gulf.

Oil prices have responded accordingly. Brent crude was trading above $97 per barrel Monday morning, while Goldman Sachs warned that a further expansion of attacks on commercial shipping could push crude as high as $120 per barrel. Heightened attacks on shipping in the region have historically been accompanied by rising war-risk insurance premiums for vessels transiting Gulf waters, adding to the cost of every voyage through the area.

Iran continues to insist that Hormuz remains closed and that unrestricted passage will not resume while U.S. attacks and the naval blockade continue. Washington, by contrast, says millions of barrels of oil are still moving through the waterway. Independent tanker tracking continues to show traffic far below prewar levels. Whether the corridor agreement is formally signed, and whether the IMO receives and acts on a notification, will shape how quickly commercial traffic resumes and on whose terms.

Source: OilPrice.com — By Charles Kennedy