US President Donald Trump said Iran has asked the US to lift a naval blockade of the strait while the two sides negotiate an end to hostilities that have choked off energy supplies from the Middle East.
The Strait of Hormuz has been virtually impassable since the conflict began in late February, driving up energy prices after flows of crude, natural gas and oil products were cut off. The war has raised fears about an inflation crisis, with the International Energy Agency calling it the biggest supply shock in history.A ceasefire has held since early April with the US and Iran locked in an impasse over peace talks, although the naval blockade appears to be putting pressure on Tehran. The nation is rapidly running out of crude storage space, which is threatening to accelerate production cuts, according to Kpler Ltd.
Mediators expect Iran will submit a revised proposal to end the war in the next few days, CNN reported on Tuesday, citing people close to the process. Tehran wants the crucial waterway for oil shipments open “as soon as possible, as they try to figure out their leadership situation,” Trump said on Truth Social.The conflict has led to the United Arab Emirates deciding to leave OPEC next month after six decades of membership. The UAE said the shortage caused by the war will require agility to respond to market demands without being constrained by the collective decision-making process by the wider group.
The US is ramping up pressure on Iran via other means. The Treasury Department’s Office of Foreign Assets Control has warned financial institutions of sanctions risks on Chinese oil refiners — mostly independent processors in Shandong province — over ties with the Islamic Republic.
On Friday, the US sanctioned Hengli Petrochemical (Dalian) Refinery Co., one of China’s largest private refiners, over links to Iran, a move that risks tensions between Beijing and Washington ahead of an expected summit between the country’s leaders. Hengli said it had never engaged in any trade with Iran.
The Treasury Department has also issued “firm guidance” warning of significant sanctions exposure related to paying a “toll” to the Iranian government to gain passage through Hormuz. Tehran has been seeking to enact a national law to formalize a payment system for ships crossing the waterway.
With inputs from BloombergAlso Read: Asian shares decline during open, brent snaps gains
