Hormuz Deal Hits Snags Over Sanctions and Insurance Quagmire

A proposed deal between Iran and Oman to control ships entering the Gulf through the Strait of Hormuz is facing significant hurdles, according to industry sources. The deal would allow Tehran to intervene with inbound traffic while outbound traffic would follow a route between Iran and Oman.

The proposal has been met with skepticism by shipping companies and oil traders due to US sanctions and restrictive insurance clauses on payments. Any payment to the Persian Gulf Strait Authority, which Iran set up in May, could lead to asset freezes under US law.

The introduction of fees for passing through the strait would create major compliance issues for shipping companies, as they would need to navigate complex insurance regulations. The Lloyd's Market Association has introduced a clause that terminates insurance cover if a vessel pays a transit fee or toll.