Iran says it has reached terms with Oman on a framework to secure safer transit through the Strait of Hormuz, but Tehran’s Revolutionary Guard claims the United States is preventing the agreement from moving forward.
The dispute has created an unusual market setup.
Shipping traffic through the strait remains severely reduced, Iran says the waterway will stay closed unless Washington accepts its conditions, and technical talks on a temporary corridor are still continuing. Yet oil prices have continued to fall, with Brent dropping below $90 per barrel.
That suggests traders are focusing less on current physical disruption and more on the possibility that military escalation is easing.
Iran and Oman Say a Framework Is Taking Shape
Iran and Oman said in a joint statement that their foreign ministers had discussed a proposed framework for a joint temporary navigational corridor through the Strait of Hormuz.
The plan also includes a joint effort to clear mines from the waterway.
Those measures would be temporary.
The two countries said technical negotiations would continue toward a permanent corridor, future administration of the strait, information sharing, traffic management and navigational and security services.
That gives the talks a much broader scope than simply reopening a passage for ships.
They could eventually reshape how transit through the waterway is administered.
The Revolutionary Guard Says Terms Have Already Been Agreed
Iran’s Revolutionary Guard went further than the joint statement.
According to the group, Iran and Oman have already agreed on their respective shares in the administration of the strategic route, including revenues associated with its management.
The IRGC blamed Washington for preventing the arrangement from being implemented.
It also said the strait would remain closed unless the United States accepted Tehran’s conditions.
That creates a direct contradiction with the message coming from Washington.
Trump Says Hormuz Is Already Open
President Donald Trump rejected the idea that the strait remains effectively closed.
In a radio interview, he said U.S.-linked shipping was already moving through the passage and described Hormuz as “a very functioning strait.”
Trump acknowledged that drones or rockets were occasionally being fired but said large amounts of oil were still moving through the waterway.
The gap between Tehran’s description and Trump’s is important.
One side is presenting the passage as still subject to political closure.
The other is presenting it as operational, despite security incidents.
Physical Shipping Data Shows a Much Weaker Picture
Preliminary data from Kpler suggests traffic remains far below normal levels.
Only five commodity vessels crossed the Strait of Hormuz on Tuesday.
The 10-day average was 15.
That means daily traffic was running at roughly one-third of the recent average.
Before the conflict with Iran, around one-fifth of global crude typically moved through the strait.
So even if some ships are transiting, the waterway is still operating well below normal capacity.
Oil Prices Are Falling Anyway
Despite the reduced traffic, Brent extended its decline and fell below $90 per barrel.
The October contract traded around $86.83, down 1.15%.
This is notable because physical shipping conditions remain constrained.
Normally, a sharp drop in traffic through one of the world’s most important oil chokepoints would support prices.
Instead, traders appear to be assigning greater weight to signs that the risk of a renewed military escalation is falling.
Markets Are Pricing Expectations, Not Just Current Conditions
Oil markets often move ahead of physical developments.
If traders believe a diplomatic framework will eventually restore shipping, they may start removing geopolitical risk premiums before vessel traffic actually returns.
That appears to be happening now.
Iran and Oman are still negotiating.
The strait is not operating normally.
But the possibility of a temporary corridor, mine clearing and future administration is enough to change expectations.
Washington’s Behavior Is Also Sending a De-Escalation Signal
Another factor weighing on oil is the reported return of U.S. diplomats to Gulf states.
That move has been interpreted as a sign that Washington does not currently expect a major new military escalation.
Markets tend to watch diplomatic staffing, military movements and evacuation decisions closely during regional conflicts.
If personnel are returning rather than being withdrawn, investors may see that as evidence that the near-term security outlook is improving.
Reports of a Possible Ceasefire Added More Pressure
Russia’s RIA Novosti also reported that the U.S. and Iran could announce a new ceasefire agreement within days.
The report cited Iranian and Pakistani sources and said the agreement could include freedom of shipping through Hormuz.
However, that report was not independently verified.
The White House did not comment.
For markets, even unconfirmed reports can influence short-term pricing when they reinforce an existing de-escalation narrative.
But they should not be treated as established fact.
Trump Says He Is in No Hurry to Restart Talks
The political picture remains contradictory.
Trump has recently claimed that Washington and Tehran are involved in behind-the-scenes negotiations.
Iran has denied that such talks are happening.
Last week, Trump said discussions were over and there were no plans to restart them.
In a later interview with Al Jazeera, he said he had no timetable and was in no hurry to resume negotiations.
That means the market is trying to price a diplomatic process that neither side is describing consistently.
Washington Still Sees Both Economic and Military Pressure as Useful
Trump also said he believes both economic measures and military operations are effective against Iran.
That is significant because the current decline in oil depends heavily on expectations of reduced military risk.
If Washington chooses to intensify military action again, the market could reverse quickly.
For now, however, the administration appears to be placing more emphasis on economic pressure.
The U.S. Has Announced Sanctions but Not Fully Escalated Them
Treasury Secretary Scott Bessent recently announced what he called an “economic D-day” against Iran.
The plan threatens secondary sanctions against countries, companies and intermediaries seen as enabling Tehran.
A list of 60 individuals, entities and vessels was included.
But the most consequential secondary sanctions have not yet been imposed.
That matters because the market had feared a broader move against countries and financial institutions involved in Iranian oil trade.
Chinese Financial Institutions Remain a Key Pressure Point
Washington has so far avoided imposing major secondary sanctions on Chinese financial firms suspected of helping facilitate Iran’s oil trade.
That restraint is important because China buys around 90% of Iran’s oil.
A severe crackdown on Chinese institutions could have much larger implications for Iranian exports than targeting smaller intermediaries.
Bessent said the administration did not want to “blow up the global financial system” and preferred to give counterparties a cure period before moving more aggressively.
China Has Already Threatened Retaliation
Beijing responded quickly.
China’s Foreign Ministry said the country would take all necessary measures to protect its rights and interests if the U.S. expanded economic pressure against nations trading with Iran.
That introduces another layer of uncertainty.
Washington may want to weaken Tehran economically without triggering a broader financial confrontation with China.
This tension helps explain why sanctions have so far been less aggressive than some traders expected.
Hormuz Negotiations May Matter More Than Sanctions in the Short Term
For oil, the most immediate question is probably not how broad the sanctions become.
It is whether shipping can normalize.
A temporary corridor and a mine-clearing operation would provide a direct mechanism for restoring traffic.
A permanent administrative agreement would go further.
If those steps progress, the geopolitical premium embedded in oil could decline further even while sanctions remain in place.
The Main Risk Is That Political Claims Do Not Match Reality
The current situation is unusually difficult to interpret because the public statements conflict.
Iran says the U.S. is blocking a deal.
Trump says the strait is already functioning.
Traffic data shows a large reduction in vessel movement.
Unverified reports point to a possible ceasefire.
Technical talks are continuing.
All of those facts can exist at the same time, but they point in different directions.
That creates a market vulnerable to sudden reversals.
Shipping Data Will Be More Important Than Political Messaging
The next meaningful confirmation should come from the waterway itself.
If daily vessel traffic starts moving back toward its recent average, it would support the view that de-escalation is becoming operational.
If traffic remains depressed, the market may eventually question whether expectations have moved too far ahead of reality.
Mine clearing, corridor implementation and insurance conditions will also matter.
The stronger those signals become, the more durable the decline in geopolitical risk may be.
Conclusion
Iran says it has reached terms with Oman on a framework to secure transit through the Strait of Hormuz but claims the United States is blocking implementation.
Trump, meanwhile, insists the waterway is already functioning.
Shipping data suggests conditions remain far from normal, with only five commodity vessels crossing on Tuesday compared with a 10-day average of 15.
Yet Brent continues to fall because markets are increasingly pricing a path toward de-escalation rather than the current level of disruption.
Final Takeaway
The central contradiction is that Hormuz remains physically constrained while oil markets are already pricing political improvement. If the Iran-Oman framework produces a functioning corridor and traffic begins to recover, that decline in the risk premium may be justified. If negotiations stall while vessel movements remain depressed, oil could quickly reprice the gap between diplomatic optimism and physical reality.
