Iran bans US and Israeli ships from the Strait of Hormuz — Brent soars 4%

What exactly does the Iranian project contain and why does it scare insurers?

According to the text published by Fars, Iran reserves the right to completely block the passage of American and Israeli ships. For other states that have “caused harm” to the Islamic Republic, a condition of prior compensation is introduced. The mechanism for determining the amount of damage is vaguely spelled out in the document, which in itself creates room for political bargaining and selective application. The fine of 20% of the value of the cargo looks like an attempt to turn the strait into a source of direct fiscal revenue and at the same time as a deterrent. For a VLCC supertanker loaded with two million barrels of oil worth more than $160 million at current prices, the potential fine exceeds $30 million — an amount that instantly changes the economics of the voyage. ¹

The plan is currently under consideration by the relevant committee of the Majlis. This is important: even if the final version is softened, the very fact of publication has already affected the calculations of war risk insurance premiums. London insurers on Thursday increased quotes for ships heading to Persian Gulf ports by 0,05-0,15% of the hull value - a move that adds hundreds of thousands of dollars to the shipowner's costs per week. Several major Greek and Singaporean operators have already instructed captains to reduce speed and wait for clarification before entering the Iranian Navy's area of ​​responsibility.

The legal structure is worth noting separately. Iran traditionally appeals to the provisions of the UN Convention on the Law of the Sea regarding the right of a coastal state to regulate passage in territorial waters, although Tehran itself has not ratified the convention. The United States insists on a transit passage regime enshrined in customary law. It is this contradiction that makes any “strategic plan” by Iran a potential catalyst for escalation, even if the physical closure of the strait does not occur.

Explosions near Oman and the shadow of the Houthis

In parallel with the diplomatic noise, an urgent message came from the UK Maritime Trade Centre. A tanker passing through the Strait of Hormuz recorded two explosions off the coast of Oman. The crew and the ship were not injured, but the fact of the detonation in an area of ​​intense traffic instantly raised the level of alarm. So far, no party has claimed responsibility, but the context of recent days forces analysts to look towards the Yemeni Houthis, allies of Iran, who have already announced strikes on Saudi troop concentrations and an attack on a Saudi tanker near the Yanbu export terminal in the Red Sea. ²

The Houthis have been practicing combined drone and anti-ship missile strikes since 2024-2026 precisely to create the effect of a presence far beyond Yemen. The attack near Yanbu demonstrates their ability to reach the western coast of Saudi Arabia and thus influence alternative routes to Hormuz. If Tehran decides to synchronize diplomatic pressure in the strait with the actions of proxy forces in the Red Sea, the global supply chains for oil and liquefied gas will be hit twice.

Oman, traditionally a quiet mediator between Iran and the West, finds itself in a particularly awkward position. Any incident in its exclusive economic zone forces Muscat to balance its neutrality with the need to ensure shipping safety. Shipping company sources say the Omani coast guard has already increased patrols in the area of ​​Musandam Island, a strategic point with the best view of the entrance to the strait.

Why did the market react so sharply after a week of decline?

By Thursday, oil prices had lost about 8% in a week. The reason was precisely the narrative of an “almost done” deal between Washington and Tehran to increase traffic. Trump, Bessant and Rubio have publicly signaled that the details of the agreement are “critically important”, but the fact of progress has already been priced in. When Fars published the text, which looks like an ultimatum, not a basis for compromise, algorithmic funds and physical traders synchronously closed short positions.

RBC Capital Markets’ Helima Croft had been warning before the plan was released that the details of the potential deal would determine the sustainability of any rally or correction. Her assessment was confirmed within hours. The market is once again pricing in a scenario in which Iran retains the ability to selectively restrict passage and the United States responds with increased sanctions pressure on the shadow fleet and insurance companies that service Iranian oil.

Analysts estimate that 17 to 21 million barrels of oil and condensate pass through the Strait of Hormuz every day, about a fifth of global consumption. Even a 10 percent reduction in physical supplies over two weeks could exhaust Asian storage capacity and push up spreads on diesel and kerosene. That’s why the reaction was so sharp: traders were buying not so much the barrel itself as insurance against a scenario in which the strait turns into an Iranian-controlled corridor with political filters.

Deeper Connections: Tehran's Strategy and the Limits of the American Response

The publication of the draft plan fits into a long tradition of Iranian “gray zone.” Tehran rarely goes to the full closure of the strait — that would be a blow to both its own export revenues and Chinese interests. Instead, it creates legal and operational uncertainty that forces all players to pay a higher price for the risk. The ban allows American and Israeli ships in particular to save face in front of a domestic audience while leaving a loophole for European, Asian, and shadowy tankers.

Washington has already rejected any “obstruction” of freedom of navigation. The wording that has appeared in official comments leaves room for both diplomatic pressure and a demonstration of military presence. US Navy strike groups remain in the region, as well as coalition forces patrolling the approaches. But a full-scale operation to secure the convoys would require a political decision that the White House is unlikely to make given domestic priorities and the election cycle.

China, the main buyer of Iranian oil, has been publicly silent. Beijing is interested in a stable flow of raw materials and low prices, so any escalation in Hormuz contradicts its economic interests. At the same time, Chinese diplomats have traditionally avoided direct condemnation of Tehran's actions, preferring to work through closed channels. It is Beijing's position that could become the quiet factor that either softens the final version of the plan or, conversely, gives Iran additional room for maneuver.

European importers are caught between two poles. On the one hand, they need stable supplies from the Persian Gulf after several years of restructuring logistics. On the other hand, any cooperation with a mechanism that discriminates against American and Israeli vessels creates sanctions risks from the United States. London and Rotterdam traders are already calculating schemes for reflagging and transshipment at the raid to minimize direct contact with Iranian regulatory authorities.

Insurance market, shadow fleet and new routes

The marine insurance market was the quickest to react to the news. War risk premiums for the Persian Gulf rose to levels last seen during the peak of tensions in 2024. Some Lloyd's syndicates have temporarily suspended quotes for ships linked to Israeli beneficiaries. This creates a paradox: even if there is no physical denial, an economic barrier is already forming.

The shadow fleet, which transports Iranian, Russian and Venezuelan oil, has received mixed signals. On the one hand, any complication of legal traffic increases the demand for the services of vessels with transponders turned off. On the other hand, increased attention to the strait increases the likelihood of inspections and detentions. Captains have already been advised to change anchorages and avoid gathering in areas where Iranian boats are most actively patrolling.

Alternative routes remain limited. The East-West pipeline through Saudi Arabia to the Red Sea has a capacity of about 5-7 million barrels per day and is already operating at high capacity. The UAE can redirect some of the volume through the pipeline to Fujairah, which allows it to bypass the strait, but this capacity is also not unlimited. As a result, the market returns to a simple truth: Hormuz has no full-fledged substitute.

The domestic political dimension of the Iranian decision

The publication of the draft plan through Fars, rather than the more restrained IRNA agency, indicates the desire of the hard-line establishment to fix the maximum position before possible negotiations. The parliamentary committee reviewing the document is under the influence of conservative factions, for whom any concession to Washington looks like weakness. At the same time, the presidential vertical and the team responsible for the negotiations understand the cost of escalation for their own economy, which is already working under sanctions pressure and inflation.

Iran's internal media is already presenting the plan as an act of sovereignty protection. This makes it difficult to back down quickly. Even if the final version is milder, Tehran will have to explain to its own citizens why the "strategic plan" did not work in full. That is why diplomats expect a long period of uncertainty, during which the rhetoric will remain tough and practical steps will be measured.

What's next for prices and the region?

The coming sessions will be determined by two streams of information: clarifications from the Iranian parliament and signals from Washington about its readiness to impose secondary sanctions on companies that agree to the new rules of passage. If the Majlis approves the plan without significant changes, the risk premium in the Brent price could consolidate in the range of $5-8 per barrel. If there are signs of softening, the market will quickly return to the downward trend observed at the beginning of the week.

A separate factor remains the behavior of Saudi Arabia and the UAE. Both countries are interested in stable prices, sufficient to fill their budgets, but not so high as to accelerate the energy transition in importing countries. Their willingness to increase production in response to disruptions will be a key stabilizer. So far, official statements from Riyadh and Abu Dhabi have been restrained - both capitals prefer not to aggravate the already complex regional configuration.

For Ukraine and other oil importers in Central and Eastern Europe, the indirect effect may manifest itself through rising prices for diesel fuel and jet fuel. Even if physical supplies from the Persian Gulf to Europe do not decrease, the global supply and demand balance will shift, and European refineries will pay a higher price for raw materials. This issue is worth monitoring now, without waiting for the autumn demand season.

The Strait of Hormuz has once again confirmed its status as a point where a local political decision instantly becomes a global price factor. The Iranian draft plan is not just a bureaucratic document. It is a test of the readiness of the market, insurers, military and diplomats to act in conditions where the rules of passage are determined not only by international law, but also by the balance of power at a particular moment. While the text is being considered by a parliamentary committee, every new explosion near Oman or statement by the Houthis will add to the nervousness. And every barrel passing through the strait will carry in its price the echoes of this August Thursday.

The world is once again looking at the narrow strip of water between Iran and Oman. The outcome of the “strategic plan” will determine not only the trajectory of oil prices in the coming weeks, but also the degree of trust in freedom of navigation as a basic principle of global trade. So far, this trust has been called into question again — and the market has already paid the price for it.

Sources

1. CNBC, "Oil prices jump after Iran publishes restrictive draft plan for Strait of Hormuz," August 6, 2026.
2. UK Maritime Trade Operations Centre, incident report on explosions off the coast of Oman, 5 August 2026.
3. Fars News Agency, text of the initial draft of the strategic plan for managing the Strait of Hormuz, August 6, 2026.
4. RBC Capital Markets, Helima Croft's commentary on the details of a potential US-Iran deal, Squawk Box broadcast, August 2026.
5. Statements by US President Donald Trump, Treasury Secretary Scott Bessant, and Secretary of State Marco Rubio on progress in negotiations on traffic through the Strait, early August 2026.
6. Houthis' statement about an attack on a Saudi tanker near the Yanbu terminal and strikes on troop concentrations, August 5–6, 2026.
7. Estimates of oil transit volumes through the Strait of Hormuz, data from industry monitoring services and EIA, are current for the summer of 2026.
8. Comments from shipping operators and London insurance syndicates on war risk premium increases, August 6, 2026.