The Battle for the Strait of Hormuz: Inside the Iran-Oman Negotiations and the Gulf-Backed Plan for Voluntary Transit Fees

Oman has won backing from Gulf states for a compromise plan that would let Iran collect voluntary navigation fees from ships using the Strait of Hormuz, in an effort to end the disruption to global oil trade caused by the ongoing U.S.-Iran war . The proposal represents the most significant diplomatic effort yet to resolve one of the most dangerous flashpoints in the Middle East.

Under the Omani plan, Iran would not exercise sole control over the strategic waterway. Instead, Oman has presented Tehran with a joint regional mechanism to manage the strait, designed to prevent Iran from unilaterally imposing mandatory tolls . Ships would be asked to pay a "voluntary fee" rather than fixed transit tolls, potentially unlocking a multi-billion-dollar revenue stream for both Oman and Iran while keeping the strait open to commercial shipping .

The arrangement is modeled partly on the Strait of Malacca governance framework — a concept that Europe is also evaluating, provided payments are voluntary and endorsed by the UN International Maritime Organization . A Gulf source told Reuters on July 28 that the proposal has the backing of regional countries .

Competing Visions for Governance

Iran and Oman are advancing fundamentally different visions for the strait's future .

• Iran's position: Tehran is insisting on mandatory fees and a maximalist interpretation of its role, decreeing that it alone can determine the strait's status and resisting the involvement of other countries or institutions . The Institute for the Study of War reported that Iran continues to insist on what it calls an "illegal toll scheme" despite Omani opposition to mandatory fees .
• Oman's position: Muscat is pushing for a shared, multilateral governance model with voluntary payments. Oman has rejected Iran's bid for exclusive control and submitted a formal proposal to the U.S. and Western nations that emphasizes a joint regional approach . Omani Foreign Minister Badr al Busaidi has said his country opposes the imposition of "transit fees" .
• U.S. counter-position: The Trump administration has publicly opposed any fee system. However, Trump has also proposed that the U.S. become the "guardian" of the Strait of Hormuz and charge a 20% fee on all goods transported through the waterway — a policy that itself constitutes a competing governance claim, creating a three-way standoff over who controls the world's most vital energy chokepoint .

Escalating Military Strikes and Diplomatic Tensions

The negotiations are unfolding against a backdrop of sustained military conflict. The U.S. has been conducting nightly airstrikes against Iranian military targets. By July 22, the U.S. had launched strikes for 11 consecutive nights, targeting Iranian air defense systems, coastal surveillance, and missile capabilities .

On July 13, Trump reinstated a naval blockade of Iranian shipping and proposed the 20% fee for safe passage, marking a significant policy reversal from earlier U.S. opposition to any toll system . U.S. Central Command said the strikes are "designed to continue degrading Iran's ability to threaten commercial shipping" .

Trump has threatened to authorize strikes against Iranian civilian infrastructure — including bridges and power plants — if Iran continues targeting vessels in the strait . The situation has drawn in the U.K., with reports indicating U.S.-U.K. coordination on potential military action, and European nations also considering proposals that would allow voluntary navigation fees under UN endorsement .

The U.S.-Iran Memorandum of Understanding (MoU) , signed in mid-June, called for a 60-day negotiation period during which Iran agreed to waive fees . That period is now advanced, and Trump has warned of renewed strikes if no diplomatic resolution is reached . In Ankara for a NATO summit on July 8, Trump signaled he considered the MoU potentially void, saying he was "not sure" he wanted a deal .

UN Mediation and Diplomatic Channels

Efforts to find a diplomatic off-ramp continue despite the fighting:

• UN role: Europe is considering proposals that would require endorsement from the UN International Maritime Organization to legitimize any voluntary fee structure .
• Qatari mediation: Qatar's Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani visited Muscat in late June to pave the way for broader Iran-Gulf-Iraq talks on the strait's future .
• Omani delegation in Tehran: Oman sent a diplomatic delegation to Tehran on July 24-25 to continue discussing management options, even as U.S. and Iranian strikes continued . Iran announced progress in these talks, saying they established "shared principles and operational frameworks" for safe transit .
• Multi-party talks: Gulf states are expected to push for no tolls, while Iran may propose "environmental, navigation and security fees" as a compromise .

Iran's ambassador to Moscow, Kazem Jalali, has stated the strait "will remain open, albeit with new stipulations to be defined by Iranian and Omani officials" .

Broader Escalation Risks

The situation carries severe risks of a wider conflagration:

1. Direct U.S.-Iran war footing: Sustained nightly airstrikes and reciprocal attacks on shipping and military bases have created a de facto state of war .
2. Infrastructure targeting: Trump's threat to hit Iranian bridges and power plants could trigger a major escalation and potential Iranian retaliation against Gulf state allies .
3. Global energy disruption: The Strait of Hormuz handles about 20% of the world's oil supply. Disruptions have already roiled oil markets, and the competing fee proposals introduce regulatory uncertainty for shipowners and traders .
4. Nuclear escalation risk: Iran has warned the U.S. against targeting its nuclear facilities, raising the specter of a nuclear dimension to the conflict .
5. Gulf state dilemma: Oman is caught between its alliance with the U.S. and its need to maintain a working relationship with Iran, testing its historic balancing act .