US-Iran technical talks continue as Hormuz traffic drops 75%

A US official said Wednesday that technical negotiations with Iran remain underway, even as commercial traffic through the Strait of Hormuz has fallen to 25 vessels a day — a 75% drop from pre-war levels.

"The flaw of the MOU was not so much that it avoided the nuclear issue, but that it apparently papered over major differences between the US and Iran on the key issues the agreement was intended to solve," said Eric Brewer, a former senior US intelligence community Iran analyst.

The standoff has kept Persian Gulf crude exports at about 9.5 million barrels a day, according to ship-tracking firm Kpler, while the US Navy has quietly helped commercial vessels navigate an alternative southern corridor closer to Omani waters. Iran's foreign minister, Abbas Araghchi, warned that any attempt to bypass Tehran's preferred route would increase tensions in the region.

The Strait of Hormuz handles about 21% of global oil trade, and the dispute over its control threatens to unravel the 60-day framework signed June 17. With the window already three weeks in and traffic still disrupted, the gap between Washington's goal of reopening the waterway and Tehran's assertion of authority over it continues to widen.

Paragraph 5 dispute fuels the standoff

The disagreement centers on Paragraph 5 of the memorandum of understanding, which assigns Iran responsibility for restoring commercial shipping through the strait while calling for future talks with Oman over its administration. US officials viewed the language as requiring Iran to reopen the passage, while Tehran has interpreted it as recognition of Iran's authority over the waterway. A US official familiar with the negotiations told the Wall Street Journal the two sides are on "different planets" over the clause's meaning.

Iran's Islamic Revolutionary Guard Corps has pushed Tehran toward a more expansive interpretation, including future tolls and permit requirements for ships transiting the strait through a newly established Persian Gulf Strait Authority, according to the Journal. Iranian Parliament Speaker Mohammad Bagher Ghalibaf reinforced that position, writing on X that "the Strait of Hormuz will only open with 'Iranian arrangements,' not American threats."

The competing approaches have fueled renewed violence. CENTCOM struck 10 Iranian military targets early Sunday after an Iranian drone attack on the M/T Kiku, a Panama-flagged crude oil tanker heading to Fujairah in the UAE. Iran retaliated with strikes on US bases in Kuwait and Bahrain, drawing condemnation from both countries. Jordan said Thursday it intercepted Iranian missiles after the latest exchange.

Trump declared the framework agreement "over" at a NATO summit in Ankara, saying "I'm not sure I want to make a deal with them," before asserting he does not believe war with Iran will restart. The last time the US and Iran exchanged direct strikes at this scale was in February 2025, when the conflict began with the US-Israeli airstrikes that triggered Tehran's blockade of the strait.

The 60-day framework was supposed to open the door to a final settlement covering Iran's nuclear program, the lifting of sanctions, and the long-term status of the Strait of Hormuz. Instead, the vague language of the MOU has allowed both sides to exploit its loopholes. Deputy Foreign Minister Kazem Gharibabadi said Monday that Iran's first meeting with Oman on managing the strait had been held, but that reports of technical talks in Doha "are not confirmed."

For markets, the risk is that the window for a negotiated reopening closes without a resolution. Oil prices remain elevated by the disruption, and any further escalation could push crude benchmarks higher while driving a flight to safe-haven assets. The next flashpoint will be whether the alternative US-backed shipping corridor near Omani waters can sustain the current export flow without triggering another round of Iranian retaliation.

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