The proposal, as described in reports on Friday, would create a joint framework under which ships would need arrangements with both coastal states while passage is presented by Tehran as safe and uninterrupted rather than formally blocked.

The move lands at a moment of exceptional strain in one of the world's most sensitive waterways. The strait, which links the Gulf to the Gulf of Oman and the Arabian Sea, carried about 20 million barrels a day of oil in 2024, equal to roughly 20% of global petroleum liquids consumption, according to official US energy data. It is also a major route for liquefied natural gas exports, especially from Qatar. Any attempt to alter the rules of passage there carries consequences far beyond the Gulf, with refiners, insurers, shipowners and governments all watching closely.

Iranian officials have sought to frame the draft as a supervisory mechanism rather than a declaration that the waterway is closed to all traffic. That distinction matters diplomatically. Tehran appears to be arguing that a changed security environment requires a new administrative arrangement with Muscat, while trying to avoid the political cost of saying outright that it is ending freedom of passage. At the same time, other reporting indicates vessels could face permit requirements or prior licensing, a step that would amount to a sharp increase in coastal-state control over a passage long treated by trading nations as essential to uninterrupted navigation.

That is where the legal dispute begins. The UN Convention on the Law of the Sea sets out a regime of "transit passage" for straits used for international navigation, defining it as continuous and expeditious transit between one part of the high seas or exclusive economic zone and another. In practical terms, maritime powers have long held that coastal states cannot turn such routes into discretionary checkpoints. Iran is not a party to the convention, but the debate over Hormuz has for years revolved around whether key elements of transit passage have hardened into broader international practice. A licensing system requiring vessels to secure dual approval from Iran and Oman would therefore be read by many governments as a challenge to established navigational norms.

Oman's role is particularly important because it has traditionally positioned itself as a pragmatic Gulf mediator with working ties across regional rivalries. A joint Iranian-Omani mechanism would give Tehran a stronger claim that its plan is not unilateral. Yet it could also place Muscat in a delicate position if commercial users of the strait, Western naval powers and major Asian importers conclude that the arrangement weakens the principle of open transit. For energy buyers in Asia, the concern is less about legal theory than about whether cargoes can move on predictable schedules and at insurable cost.

The commercial effects are already visible. The International Maritime Organization said this week that since 28 February it had confirmed 21 attacks on commercial ships, with 10 seafarers killed and around 20,000 civilian seafarers still aboard vessels in the Gulf. Reuters and other outlets have reported that governments are discussing ways to protect shipping, while the UN Security Council has been wrestling with a Bahrain-backed resolution on safeguarding maritime traffic. Oil has surged as traders price in both physical disruption and the risk that insurance and security constraints will deter normal tanker movements even without a total physical blockade.

Tehran's calculation appears to be that a regulated channel, jointly managed with Oman, is more defensible than either an open-ended confrontation over closure or a full retreat under outside pressure. That could allow Iran to project control, extract political leverage and claim that it is offering an orderly model for navigation under wartime conditions. Critics, however, are likely to see the proposal as an attempt to convert geography into a permissions-based system under Iranian influence. Much will depend on the final wording of the draft, Oman's exact role, and whether ships from all flags and cargoes are treated equally.

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