Iran has proven that controlling 21 miles of water is more powerful than an aircraft carrier.

"The Strait of Hormuz will not be reopened through military attacks."

— Hossein Kanani Moghaddam, former senior IRGC commander

Iran and Oman announced on Wednesday that they are in the final stage of drafting an agreement to reopen the Strait of Hormuz, five months after Tehran closed the waterway in retaliation for the US and Israel launching war. Both Washington and Tehran have signaled they are close to a deal. The two sides remain fundamentally divided on what that deal would look like.

The dispute centers on something surprisingly concrete: who controls the lanes. Iran wants to manage inbound shipping through its territorial waters and charge fees for security and environmental services. The United States insists on total freedom of navigation, no Iranian approval for vessels, and no charges. Under international maritime law, coastal states may not levy tolls on international straits. Iran apparently plans to find a legal workaround.

Translation: the country the US has been bombing for five months still holds the keys to one-fifth of the world's oil and gas supplies, and it has no intention of handing them back.

The Strait of Hormuz is 21 miles wide at its narrowest point, between Iran and the United Arab Emirates. In peacetime, about 21 million barrels of oil and massive volumes of liquefied natural gas pass through it every day. Since Iran closed it in March, the global economy has been running on detours and anxiety. Oil prices averaged $96.68 per barrel in the second quarter of 2026, up from $66.71 in the second quarter of 2025. Gasoline in the United States has averaged above $4 per gallon, nearly 40 percent higher than pre-war rates.

The negotiations between Iran and Oman are being conducted without direct US participation, which adds a layer of complexity. Iran has consistently insisted that it is dealing only with Oman, not Washington. Iranian Foreign Ministry spokesperson Esmail Baghaei signaled on Wednesday that a joint statement would be issued "if certain parties do not obstruct this process," an apparent reference to recent US strikes on Iran.

Two regional officials told the Associated Press that Iranian and Omani negotiators have finalized a draft deal awaiting final approval from Iran's Supreme Leader Ayatollah Mojtaba Khamenei, who is believed to have been wounded in the war's opening strikes and has not been seen in public since.

The proposed arrangement would establish what Iranian officials are calling a "middle corridor" through the strait, with ships entering the Persian Gulf through an Iranian-controlled route and exiting through an Oman-controlled route. Service fees would be charged for security and environmental protection. The arrangement would last two to four months, potentially longer.

Vice President JD Vance described the diplomatic effort to end the war as "messy," acknowledging that progress sometimes requires moving backward. He called Iranians "extraordinarily difficult people." The assessment is accurate but misses the larger point. Iran is not being difficult because it wants to be. Iran is being difficult because its leverage is real.

The military situation is what makes Iran's position so strong. US commanders have warned that the Pentagon's munitions stockpile is "dangerously low." The military has burned through nearly 80 percent of its THAAD interceptors and roughly half of its Patriot interceptors since the war began. According to the Center for Strategic and International Studies, it would take three or more years to rebuild THAAD inventories to pre-war levels, even with accelerated production.

The US has also used "virtually all" of its ATACMS and Precision Strike Missiles, the highly accurate long-range weapons used in offensive strikes. Replenishment rates are abysmal: roughly 15 new Tomahawks and 20 new Patriots per month under current delivery schedules.

Pentagon spokesman Sean Parnell pushed back: "America's military is the most powerful in the world and has everything it needs to execute at the time and place of the President's choosing." White House spokesperson Anna Kelly said the US has "more than enough munitions, ammo, and stockpiles." Defense Secretary Pete Hegseth posted "not true" and "shame on you" on X in response to the CNN report.

Mark Cancian, a retired Marine Corps colonel and senior adviser at CSIS, assessed it differently. "When we talk about missile defense, we don't have that many left, and there are no good substitutes. If we run out of Patriots, then the missiles get through."

The Muwaffaq Salti airbase attack in Jordan on July 17 demonstrated the stakes. Three US soldiers were killed when Iranian missiles slipped through American and Jordanian air defenses. The military has reportedly adopted a more judicious approach to intercepting Iranian attacks deemed unlikely to cause major harm, a strategy that preserves interceptors but increases the risk of miscalculation.

The June memorandum of understanding that was supposed to end the fighting collapsed last month. Iran attacked several ships that had taken an Oman-approved route backed by the US, demonstrating that the previous framework did not guarantee safe passage. Now both sides are back at the negotiating table with a new draft.

There is an additional complication: Iran has stated it will not reopen the strait until the US naval blockade on Iranian ports is lifted. Washington has not committed to lifting the blockade as a precondition. And the Houthis in Yemen, aligned with Iran, have escalated attacks on shipping in the Red Sea, closing the Bab el-Mandeb Strait to Saudi-linked vessels. The conflict is widening rather than narrowing.

President Trump has repeatedly alternated between threatening massive strikes on Iranian infrastructure and signaling diplomatic progress. Over the weekend, he was reportedly planning to move forward with major strikes. Gulf allies told him they feared Iranian retaliation against their energy infrastructure. Trump agreed to stand down. The planned strikes are not off the table for future dates, but the pattern is now familiar: threaten, negotiate, pause, repeat.

The question is why the United States keeps cycling through the same escalation when its munitions are dwindling, its allies are nervous, and its public is increasingly alienated by a war with no declared end state. The original goals of the conflict included toppling Iran's government and ending its nuclear program. Neither has been achieved.

While ordinary Americans are paying $4 per gallon for gasoline, Big Oil is setting records. ExxonMobil reported $14.5 billion in second-quarter earnings, its highest quarterly profit in four years. Chevron reported $12 billion, a six-year high. Shell more than doubled its quarterly earnings to nearly $10 billion. BP's profit more than doubled to $5.73 billion. Saudi Aramco reported $32.69 billion, up 44 percent year-on-year.

The energy sector recorded 135.3 percent year-on-year earnings growth in the S&P 500, by far the highest of any sector. In the United Kingdom, petrol prices hit a new high of 160.85 pence per liter. The British economy is forecast to shrink in 2027 if the strait does not reopen before mid-year.

Trump reacted furiously when confronted with the profits. "Chevron, too much money. ExxonMobil, too much money," he said. "They're going to give some of that back to the public and they better cut the retail price." The companies that have lobbied Washington for decades are now expected to subsidize the cost of a war they had no hand in starting.

Analysts acknowledge that Washington's priority has shifted from preventing Iran from playing any role in administering the strait to simply ensuring ships can pass safely. Trita Parsi of the Quincy Institute said Washington "should not reject an agreement merely because it fails to preserve the appearance of unqualified American dominance." David Des Roches, former director of Arabian Peninsula affairs at the Pentagon, assessed that Iran would likely deny free international passage in areas of its territorial waters, "and that's probably about the best that can be reached at this point."

The reality is that a country the United States has been striking from the air for five months has demonstrated that geographic choke points remain the most effective strategic assets in modern warfare. An aircraft carrier fleet cannot replace the strait. A munitions stockpile that is 80 percent depleted cannot replace it either.

Iran learned something basic about asymmetric power: control the waterway, and the world comes to you. The question is whether the United States has learned it too.