Iran and Gulf countries discuss Hormuz navigation on Monday, oil price risk premium faces revaluation

⑴ Iran and the six member states of the Gulf Cooperation Council will advance negotiations in Oman on Monday, aiming to secure the passage of ships through the Strait of Hormuz, one of the world's key oil trade routes. ⑵ The meeting will be held in Salalah, initiated by the Omani government, amid escalating tensions in the Middle East, with markets closely watching for any potential signals of resuming oil and related product flows in the Persian Gulf. ⑶ The foreign ministers of Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait, and Oman will attend, along with Iran’s foreign minister. The goal is to push for an interim agreement to allow for the management of maritime traffic in the Strait of Hormuz and reduce restrictions on this strategic route. ⑷ The proposal includes a mechanism whereby ships can enter the Gulf through Iranian territorial waters and exit through Omani waters. Tehran and Muscat have discussed the terms for several weeks, but differences remain over the necessary conditions for a complete reopening of the strait. ⑸ However, an agreement among regional countries itself does not guarantee a complete normalization of transit. According to diplomats, a full reopening also depends on negotiations between the US and Iran, with Tehran’s demands including sanctions relief and access to frozen assets. ⑹ The possibility of an agreement has already begun to affect market expectations. Brent crude remains above $100 per barrel, with traders watching for the potential impact of the talks on energy flows. This week, Brent prices even briefly surpassed $109 per barrel due to disruptions caused by conflicts. ⑺ The situation has also sparked concerns over another strategic route, the Bab el-Mandeb Strait, where Iranian-backed Houthi forces have increased their presence and renewed threats to maritime traffic. Therefore, the Hormuz agreement could become a core tool in mitigating the risk of a broader energy crisis, affecting oil prices, fuel costs, and global inflation. ⑻ The Salalah meeting is particularly important, bringing Iran and the six GCC member states together amid the regional crisis. Saudi Arabia, the UAE, and other members are seeking to restore predictability to their exports and ensure the operation of key energy trade routes. ⑼ At the same time, they hope to avoid reaching a temporary agreement that would imply acknowledgement of Iran’s permanent control over the strait. The current alternatives under consideration focus on restoring shipping passage while broader negotiations continue between Washington and Tehran.