President Trump said late Thursday that negotiations over the Strait of Hormuz are “moving along,” speaking to reporters at the White House and declining to say more when pressed on how close an agreement is. It was his firmest public signal this week that the waterway carrying a fifth of the world’s oil is nearing a reopening.
Iranian lawmakers spent Friday debating the wording of the proposed arrangement with Oman, and state television quoted one member saying the final text will be announced soon. Under the version reported so far, inbound tankers would move through Iranian waters and outbound tankers through Omani waters — a split-lane system that lets Tehran hold the appearance of control while cargo flows again.
The obstacle is what Iran published a day earlier. Its draft plan would bar American and Israeli vessels from the strait and keep other nations Tehran says have harmed it out until compensation is paid, with a penalty of 20% of cargo value on violators and full reopening conditioned on the US lifting its naval blockade. Washington’s stated position is the reverse: open commercial navigation, no Iranian tolls, and no requirement that ships get Tehran’s approval to transit, with a US official telling the Associated Press that any interim arrangement would carry neither approval nor fees.
Traders spent the week pricing the distance between what Trump says and what Iran writes. Brent closed Thursday up 3.8% at $82.49 a barrel and West Texas Intermediate settled 2.8% higher at $77.29. Friday extended it, with October Brent at $83.52 and September WTI at $78.14. Both benchmarks still finish the week down more than 8%, the drop dating to Tuesday, when Treasury Secretary Scott Bessent said on CNBC that a deal restoring free movement could come as soon as Wednesday.
Eight percent came off on the expectation of a deal and part of it went back on when the draft language turned out narrower than the optimism. For anyone hedging fuel, that is the practical state of this market: it is trading on a document that has not been finalized, moving on each statement about it.
The effect reaches past energy. The 10-year Treasury yield rose seven basis points during Thursday’s US session as higher crude revived concern the Federal Reserve will hold rates elevated. The dollar posted its biggest advance in two weeks, and gold gained more than 1.4% toward $4,300 an ounce. Oil feeds the inflation data the Fed watches, and that data sets borrowing costs — which is how a dispute over shipping lanes reaches a mortgage rate in Bergen County.
Before the war began in late February, roughly a fifth of global oil and liquefied natural gas shipments passed through Hormuz, and traffic has not recovered. Brent rose 24% in July and WTI 21%, the strongest month since March. The strait does not have to close to move prices; it only has to look less open than the day before.
Two other supply strains hit the same week. Ukraine struck two major Russian refineries overnight, and American imports of Saudi crude fell to zero in July for the first time since 1985, according to a UOB note. The Houthis attacked Saudi military positions and infrastructure, raising fresh questions about Red Sea routes — the alternative shippers use when the Gulf turns dangerous.
Trump’s optimism and Iran’s draft cannot both survive intact into a signed agreement. If the final text excludes American and Israeli ships, nothing reopens for US carriers, the blockade stays, and the war-risk premiums built into every Gulf voyage stay with it. If it does not, the strait opens on terms Washington set. The text decides which, and it is expected within days.
JBizNews Desk | Wall Street
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