Iran says Hormuz talks separate from US as 21% of oil at risk

Iran's push to decouple Strait of Hormuz diplomacy from Washington underscores the fragility of the waterway that moves one-fifth of the world's oil.

Iran on Sunday said its talks with Oman over the Strait of Hormuz are unrelated to the United States, a statement that highlights the strategic waterway's role as both a diplomatic lever and a flashpoint for global energy markets.

"The negotiations with Oman are focused on maritime security and commercial shipping in the Strait of Hormuz and are separate from any discussions involving the US," Foreign Ministry spokesperson Nasser Baghaei told a press conference in Tehran.

The Strait handles about 21 million barrels of crude and petroleum products daily, or roughly 21% of global consumption, according to the US Energy Information Administration. An oil tanker recently exploded after striking a naval mine in the waterway, Iranian media reported, though no group claimed responsibility. The incident followed weeks of heightened military posture by both Iranian and US naval forces in the region.

Any disruption to Hormuz traffic could send Brent crude above $100 a barrel, analysts estimate, given the market's already thin spare capacity cushion of about 3 million barrels per day held mostly by Saudi Arabia and the UAE. The last major closure — Iraq's 1990 invasion of Kuwait — removed 4.3 million barrels of daily supply and sent oil prices to $40 from $20 within weeks.

Oman and Qatar have been mediating indirect talks between Washington and Tehran aimed at stabilizing the waterway, according to people familiar with the discussions. US President Donald Trump paused military strikes on Iranian positions earlier this month to create space for diplomacy, the US ambassador to Oman said. Prediction markets now price a 7.5% probability of a US-Iran diplomatic meeting by July 31, up from 6% a day earlier.

Oil's Risk Premium Widens

Brent crude traded near $84 a barrel on Monday, with the options skew tilting sharply toward out-of-the-money calls — a sign traders are hedging against a supply shock. The cost of one-month Brent call options at $100 has more than doubled over the past two weeks, data from ICE Futures Europe show. Gold, a traditional haven, held above $2,400 an ounce, while the dollar index edged higher against emerging-market currencies. Defense sector stocks in the Gulf region also gained, with Saudi Arabia's defense index rising 2.3% on the week.

What Comes Next

The next round of Omani-mediated talks is expected within days, though neither side has confirmed a date. Iran's insistence that its bilateral discussions with Oman are separate from US negotiations suggests Tehran is seeking to maintain leverage while avoiding the appearance of direct concessions. For markets, the key question is whether the diplomatic channel can produce a tangible de-escalation — such as a mutual pledge to avoid interference with commercial shipping — before another incident forces a military response. The last time the Strait faced a sustained threat, during the 2019 tanker attacks, maritime insurance premiums for vessels transiting the waterway surged tenfold and remained elevated for six months.

This article is for informational purposes only and does not constitute investment advice.