After months of military escalation, interrupted ceasefires and contradictory diplomatic signals, Iran and Oman appear to have reached an agreement on a temporary shipping route through the Strait of Hormuz. This is potentially significant. Hormuz is not simply another maritime passage. Before the conflict, roughly one-fifth of global oil and liquefied natural gas supplies passed through the strait. Its disruption transformed a regional war into a global economic shock, pushing energy prices higher, complicating monetary policy and exposing the fragility of international supply chains. The announcement therefore explains why oil prices immediately fell. Brent moved towards USD 79 per barrel after losing around 11% during the first three trading sessions of the week. Markets are beginning to price the possibility that more energy could once again leave the Gulf.

However, this is not yet the full reopening of Hormuz. Iranian officials describe the proposal as a temporary route lasting between two and four months. A significant part of the traffic would pass through Iranian territorial waters, preserving Tehran’s influence over navigation. Separate reports suggest that incoming vessels could use a northern route close to Iran, while outgoing traffic would pass through Omani waters. During the transitional period, there may be no formal tolls. Iran and Oman could also work towards clearing a central shipping lane, potentially with European assistance. This would be progress, but it would remain a fragile and highly political arrangement. The central dispute has never been limited to whether ships can physically pass through the strait. It concerns who controls the passage, under what rules and with whose security guarantees. Iran considers Hormuz a strategic source of leverage. It wants ships to recognise its authority, obtain permission to transit and, ultimately, accept some form of Iranian oversight. The United States rejects the idea that Tehran can exercise unilateral control over an international waterway and has insisted on freedom of navigation. Those positions remain difficult to reconcile. The proposed route may temporarily avoid the issue rather than resolve it.

That may nevertheless be sufficient for markets. Energy traders do not require a comprehensive peace treaty before adjusting prices. They need evidence that physical flows can increase and that the probability of attacks on commercial vessels is declining. Even a temporary agreement could allow producers to restore exports, reduce congestion and reassure insurers. But there is an important distinction between reopening a route and restoring confidence. Shipowners will not immediately return to normal operations simply because governments announce an agreement. During the conflict, vessels were attacked, navigation systems were disrupted, and crews were placed at considerable risk. Some ships travelled without transponders; others used shuttle systems or waited outside the Gulf. Those practices are unlikely to disappear overnight.

Insurance premiums will remain elevated. Shipping companies will continue to demand security guarantees. Crews may refuse to sail without additional compensation. Producers are also likely to maintain alternative logistics in case the arrangement collapses. The experience of the previous ceasefire explains this caution. That agreement lasted less than one month before disputes over Hormuz triggered another round of attacks and retaliation. Neither Washington nor Tehran accepted the other side’s interpretation of the deal. A new temporary route can therefore only be credible if the operational details are clearer. Who authorises passage? Who responds if a ship deviates from the agreed channel? Who verifies that mines have been removed? What happens if the United States maintains its blockade of Iranian ports? And what role, if any, will American, European or regional naval forces play? These are not secondary technical questions. They will determine whether the agreement survives its first serious incident.

The possible involvement of European countries in demining operations is particularly interesting. Iran had previously rejected foreign participation, insisting that it alone would manage the process. A willingness to accept European involvement would therefore represent a meaningful concession. It would also provide the shipping and insurance industries with something they urgently need: independent verification that the passage is safe. Yet such a mission would still require approval from the Islamic Revolutionary Guard Corps, which has conducted many of the attacks against commercial shipping. The Iranian government may support a compromise while parts of the security establishment continue to view control of Hormuz as essential to the country’s defence and negotiating position. This internal division is one of the greatest risks to any agreement. The United States faces its own contradictions. President Trump wants to demonstrate that military pressure has forced Iran back towards negotiations. He also needs lower energy prices ahead of the mid-term elections. The war has lasted far longer than initially promised, while higher petrol prices have become an increasingly visible political cost. An agreement on Hormuz would allow Washington to claim progress without resolving the more difficult issues of Iran’s nuclear programme, frozen funds, sanctions and regional influence.

For oil markets, the near-term direction will depend less on diplomatic language than on observable shipping activity. If tanker movements increase materially, insurers reduce restrictions and producers restore exports, the geopolitical premium in oil could continue to decline. If the route remains lightly used, or if another vessel is attacked, prices could reverse rapidly. The downside risk to oil is therefore real, but so is the volatility. The market had previously priced a severe and potentially prolonged supply disruption. Any restoration of flows will remove part of that premium. At the same time, global inventories remain sensitive, alternative routes are limited, and the conflict has demonstrated that Hormuz can be disrupted again with very little warning.

The proposed arrangement is a corridor, not a peace agreement. It can reopen part of the shipping route without resolving the war. It can lower oil prices without eliminating geopolitical risk. It can create space for negotiations without guaranteeing that negotiations will begin. After six months of conflict, that may still be enough to matter. But markets should remain realistic. Hormuz may be opening. Trust is not.