The reported push to reopen the Strait of Hormuz is running into a fundamental dispute over who controls the waterway—and on what terms. Iran’s draft restrictions have revived market fears that a diplomatic breakthrough could instead produce a new oil shock.

Tehran’s apparent plan would bar U.S. and Israeli vessels and restrict ships linked to countries that have harmed Iran until compensation is paid. Violators could face penalties worth up to 20% of their cargo. The proposal remains under review, but its publication was enough to send Brent crude up 3.8% to $82.49 a barrel and West Texas Intermediate up 2.8% to $77.29.¹

That position sharply contrasts with Washington’s reported demand for passage without conditions. A U.S. official told CNBC that any temporary routes must involve “no approvals or permissions and no tolls or charges.”² Reports that inbound ships could use Iranian waters while outbound traffic follows routes closer to Oman suggest the sides may be discussing logistics, but not yet agreeing on sovereignty or access.

The political language is equally contradictory. President Donald Trump has portrayed a deal as imminent, while Iran’s chief negotiator, Mohammad Bagher Ghalibaf, accused him of “theater diplomacy,” mocking the cycle of threats followed by claims of negotiations.³ The competing narratives have made it difficult to distinguish active diplomacy from public pressure.

The consequences extend beyond rhetoric. Only two vessels crossed Hormuz on one recent day, compared with a pre-war baseline of roughly 130 to 140 daily transits, while traffic through the Bab el-Mandeb also collapsed. Oil markets are therefore pricing not merely the possibility of a failed agreement, but the risk that even a deal would not quickly restore normal shipping.

Westpac warned that higher energy prices could add to inflation, while UOB cited additional refinery disruptions and weaker Saudi crude flows as supply concerns.⁴ In short, Iran sees controlled access as leverage; Washington sees restrictions as unacceptable. Until that gap closes, the waterway remains formally negotiable but commercially perilous.