August 17, 2026

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Strait of Hormuz Remains Focal Point as U.S.-Iran Deal Still Elusive

(Amirhosein Khorgooi/ISNA via AP)

As the defunct June U.S.-Iran Memorandum of Understanding (MOU) formally expires on Monday, U.S. and Iranian assessments of traffic flows through the Strait of Hormuz will determine the next steps in the nearly six-month-long conflict. Iran’s war strategy has centered on attacking ship traffic through the waterway as a means of triggering critical global energy shortages and pressuring President Trump to accept Iranian demands. U.S. strategy has been the exact opposite — to try to restore the flow of energy through the Strait by helping direct allied shipping through the narrow waterway, crippling Iran’s ability to attack ships, and pressuring Iran economically.

As of mid-August, both sides claim their efforts are succeeding. Trump and Iranian regime leaders each claim they control the Strait. However, a consensus has developed over the past several weeks that a U.S. naval effort to guide allied ships through the Strait is increasing the volumes of oil and gas transiting the waterway to world markets. But there is growing debate among experts over the degree to which the U.S. action is mitigating Iran’s blockage of the Strait. Moreover, for anyone watching events unfold, it remains clear that Trump's claim that he controls the Strait is simply untrue.

Iran claims to have reached an agreement with Oman on the shipping routes and other arrangements related to the Strait, but some details remain unsettled. Negotiations on the respective Iranian, Omani, and other Gulf states' involvement in managing the Strait have been taking place for months but have been repeatedly interrupted by U.S.-Iran clashes. Iranian Foreign Ministry spokesperson Esmaeil Baghaei confirmed the bilateral deal, which outlines technical and security details for transit routes, with Iran's defense involvement. Under the pact, Oman will ensure safe passage of ships exiting the Gulf, and Iran will manage traffic of ships entering the Gulf. Downplaying the accord as a sign that Iran’s regime is feeling strategic pressure, Baghaei stressed that the Iran-Oman agreement alone will not mean the Strait will reopen immediately. He stipulated that the outcome depends on an end to U.S. "military threats and the naval blockade," adding the situation in the waterway will "never return" to pre-war conditions.

Despite Tehran’s denials, Iran’s concurrence to the accord with Oman might indicate Tehran senses its strategic leverage is eroding. On Thursday, Energy Secretary Chris Wright told Fox News that the U.S. and its allies have substantially mitigated Iran’s threat to Strait traffic, noting that 14 to 15 million barrels of oil are still leaving the Persian Gulf daily, compared to 20 million barrels per day pre-conflict. Wright stated: “So we’re short 5 or 6 million barrels a day from this region, but it’s a much smaller hole than people think it is." His assessment included the diversion of oil exports by Saudi Arabia, the United Arab Emirates (UAE), and, to a lesser extent, Iraq, through pipelines that avoid the Strait. The chairman of Saudi Arabia’s state-backed oil giant, Aramco, Yasir Al-Rumayyan, calls the Kingdom’s 1,200-kilometer (746-mile) pipeline crossing the Arabian Peninsula to the Red Sea port of Yanbu its economic “lifeline,” successfully rerouting seven million barrels per day away from the Strait.

Wright sought to rebut a far more pessimistic analysis from private industry sources, such as the maritime tracking firm Kpler, which estimates that volumes exported through the Strait are less than half of those reported by the U.S. Department of Energy. Wright asserted private sources are sharply undercounting oil traffic through the Strait, arguing “Almost all of the [the ships transiting the Strait] have their AIS (automatic identification system) transponders off so they are dark...” Although the Energy Department questions the assertions as exaggerated, mainly to calm global financial markets, industry and other external sources concur that the amount of energy flowing through the Strait is increasing, diminishing Iran’s leverage.

The Energy Department’s optimistic assessment of export volumes from Gulf energy suppliers no doubt contributes to President Trump’s decision, announced in early August, to center U.S. strategy on applying economic pressure on Iran. The U.S. is relying on the naval blockade of Iranian ports to put growing pressure on Iran’s regime to end its attacks on Strait traffic, which are continuing. Perceiving that Iran’s grip on the Strait is being weakened without the use of deadly force against Iran, the Trump team apparently sees no urgency to escalate military action to try to compel Iran to open the Strait completely.

Over the longer term, Iran’s ability to wield closure of the Strait as a virtual “nuclear weapon” will likely decline dramatically. The closure has led Gulf state rulers to conclude that they must develop alternatives to render the Strait essentially irrelevant over the longer term. Even as the war remains unresolved, the Gulf states have begun building or expanding pipelines and other infrastructure to bypass the Strait, in addition to vastly expanding storage capacity in Asia and elsewhere. Industry experts note these initiatives will cost billions of dollars and take years to complete, but Gulf leaders now consider developing these alternatives indispensable. Funds are already pouring into the planned projects, assuring the initiatives will not be canceled even if the war ends immediately.

The UAE and Saudi Arabia, which are already exporting significant volumes through pipelines that bypass the Strait, have begun working intensively to expand those alternatives. The UAE leadership has said that in 2027 it will complete construction of a second pipeline from the onshore oil fields in Abu Dhabi to a port in the emirate of Fujairah, on the Gulf of Oman. The project will double the country’s bypass capacity to 3.6 million barrels per day, allowing nearly all of its crude to bypass the Strait. At the same time, these pipelines will nonetheless remain within easy reach of Iranian missiles and drones. The UAE is reportedly also developing a liquefied natural gas (LNG) processing facility near Fujairah. The project might enable the UAE to compete with Qatar for LNG customers, which is a major global supplier but has few alternatives to ship that gas other than the Strait.

In Saudi Arabia, Aramco is accelerating a multibillion-dollar expansion of the East-West Pipeline to Yanbu. When completed, the upgrade will add one to two million barrels a day of capacity for that export route, leaving little of Saudi Arabia’s oil exports reliant on the Strait. Kuwait, which currently has no alternative routes to ship its oil, is reportedly in discussions with Saudi Arabia, the UAE, and Oman to build a pipeline connecting its oil fields to export terminals on the Red Sea or in Oman. For now, according to Kuwait Petroleum Corporation chief Nawwaf Al-Sabah, the country is drawing down oil it has stored outside the region. Kuwait and other Gulf states also plan to expand storage capacity in South Korea, Japan and India to guard against future disruptions of the Strait. Yet Kpler’s Amena Bakr argues that, despite the development of alternatives, access to the Strait will remain crucial for Kuwait indefinitely. And any facilities and structures in the region, even if they are not in or around the Strait, will still remain vulnerable to Iranian missile and drone strikes. Efforts to harden the infrastructure remain unproven against a determined Iranian barrage.

Iraq, denied full access to the Strait despite its broad and consistent relations with Iran, is working with other neighbors to expand oil export alternatives. The new Prime Minister, Ali al-Zaidi, visited Ankara in late July, signing an agreement to eventually ship 750,000 barrels per day (bpd) of Iraqi crude through Türkiye. The intent of the pact is to make full use of an existing Iraq-Türkiye pipeline that requires repairs and extensions to reach its 1.5 million barrels-per-day export capacity. The line currently carries a few hundred thousand barrels per day from Iraq’s northern oil fields, including those in Kurdish-controlled territory, but Baghdad plans to extend the line to its much larger oil fields in southern Iraq.

During Zaidi’s mid-July visit to Washington, Iraq and Syria signed a cooperation agreement to reconstruct the long-shuttered and dilapidated Iraq-Syria crude oil pipeline, which runs from the oil-rich Kirkuk region in northern Iraq to Syria’s Mediterranean port of Baniyas. Iraq’s state news agency reported that U.S. major Chevron would carry out the project. The U.S. State Department announced: “Upon rehabilitation, this groundbreaking project will have an initial transport capacity of 2 million barrels per day of crude oil,” adding it will be “a critical energy corridor linking Iraqi oil production to Mediterranean export markets and beyond.” Baghdad is also diversifying its plans by negotiating with Jordan to revive long-delayed plans for a pipeline that could carry up to one million barrels per day to the Port of Aqaba off the Red Sea, according to state television reports in Jordan. Even if not all of the region’s planned alternative routes come to fruition, the projects will deprive Iran of its main strategic “card,” likely within the next three to five years.