Inside Iran's Parliamentary Push to Control the Strait of Hormuz: Bill, IRGC Control, US Response, and Oil Market Fallout

Iran’s parliament has accelerated a formal legislative push to assert state control over the Strait of Hormuz, while the IRGC already exercises de facto military control over the waterway. The US is responding with escalating sanctions, a naval blockade, and new military strikes, but the standoff remains deadlocked, with severe consequences for shipping traffic and oil prices.

Iran’s Parliamentary Plan and Restrictions

Iran’s parliament introduced the "Strategic Action for Ensuring Security and Sustainable Development of the Strait of Hormuz and the Persian Gulf" in July 2026 . On August 9, the National Security and Foreign Policy Committee approved its general outlines without any opposing votes, advancing it toward a full parliamentary vote .

The proposed legislation would bar vessels from the US, Israel, and other countries Tehran considers "hostile" from transiting the Strait of Hormuz . It also proposes fines of up to 20% of a ship's cargo value for violators and the creation of an independent Iranian body to manage the waterway . Effectively, vessels would need Iranian permission to pass . The parliament initially referred 12 separate draft bills to the committee, all aimed at asserting strategic management over the strait .

IRGC’s Current Control Over the Waterway

Iran has reimposed "strict control" over the Strait of Hormuz, with IRGC gunboats actively interdicting and firing on vessels . Senior military officials state that both sides of the strait are under Iran's firm control and that no ship can pass without Iranian permission . By August 11, daily vessel transits dropped to about 6 ships, down from a 10-day average of roughly 11 .

The IRGC and Iran's Supreme National Security Council say the strait will remain closed until the US ends its military operations and blockade, releases Iran's frozen assets, ceases attacks on Iranian vessels, and agrees to a region-wide ceasefire including Lebanon and Gaza . The IRGC has stated that reopening is not tied to negotiations with Oman but is conditional on US acceptance of Iran's demands .

US Response: Sanctions, Blockade, and Military Escalation

The US Treasury's OFAC issued an alert on August 13 warning of sanctions risks for any entity paying Iranian "toll" demands for safe passage . On July 29, the US sanctioned 10 entities and 8 tankers involved in Iran's efforts to "monetize the Strait of Hormuz," including insurance brokers and front companies . The US and Gulf allies also proposed a UN Security Council resolution threatening further sanctions unless Iran halts attacks and toll demands .

The US has reimposed a naval blockade in response to renewed Iranian attacks on commercial vessels . The US military has launched multiple waves of strikes against Iranian targets, revoked licenses for Iranian oil sales, and reinstated an oil embargo . President Trump has demanded Iranian reparations as a condition for any deal, further complicating negotiations .

The confrontation has widened into an active conflict, with Iran launching retaliatory strikes against US military facilities in the region . Both sides reject the other's claims of controlling the strait, and diplomatic talks remain in deadlock .

Broader Implications for Shipping and Oil Prices

Cross-strait traffic has fallen precipitously. By August 11, daily vessel transits dropped to about 6 ships, down from a 10-day average of roughly 11 . The US and Iran issue contradictory claims about normal traffic, but independent data confirms severe disruption .

Brent crude climbed to about $88 a barrel on August 9, a nearly 5% jump, driven by fading hopes of a reopening deal . The EIA raised its 2026 Brent forecast to $86.81/barrel (up from $81.91) due to expected continued disruptions through August . Gasoline prices in the US have neared $4/gallon .

Analysts warn that if the deadlock persists beyond mid-August, oil price gains could become sharper and less "benign" . The standoff has already disrupted global energy markets for oil, petroleum products, and natural gas .