Strait of Hormuz talks test Gulf states' Iran line in Oman

Strait of Hormuz talks may bring six Gulf states and Iran to Oman while war pressure squeezes energy flows and regional economies.

Oman is seeking to host Gulf Cooperation Council foreign ministers and Iranian officials on Monday in Salalah, according to people familiar with the planning. The people were not identified because the discussions involve sensitive diplomacy and have not been finalized.

The meeting would be the first such gathering since the war involving the United States, Israel and Iran began more than six months ago, the people said. They said the plan remains uncertain, with renewed fighting between Saudi-backed forces and the Iran-supported Houthis in Yemen weighing on the timetable.

Salalah plan remains unsettled

The Gulf Cooperation Council includes Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait and Bahrain. It is not clear whether all six governments would send ministers if the Salalah meeting goes ahead, according to the people familiar with the matter.

Oman has long served as a channel between Iran, Gulf capitals and Western governments. In this case, the immediate issue is narrower: whether maritime traffic can resume more freely through a waterway that carries oil, liquefied natural gas and other cargo between the Gulf and global markets.

The Strait of Hormuz was effectively closed after the United States and Israel began bombing Iran in late February, according to the account described by people familiar with the matter. The United States has used a naval blockade to press Tehran to allow ships freer passage, while Iran has insisted on retaining control over the waterway.

Hormuz closure squeezes budgets

Iran has been discussing a traffic-management framework with Oman for several weeks, the people said. That arrangement would likely include fees for passage, an idea opposed by the United States and Gulf states, and it remains unclear whether GCC members would accept a temporary deal that increases traffic without resolving control of the strait.

Oil markets have reflected the stress around the chokepoint. Brent crude was near $104 a barrel on Friday after falling more than 3% that day, while still heading for its largest weekly gain since July after the International Energy Agency warned of a weaker consumption outlook.

Saudi Arabia and the UAE have been able to route a large share of crude exports through pipelines that bypass Hormuz. Even so, the disruption is hitting regional economies: Qatar reported its largest second-quarter deficit in almost a decade, while Saudi Arabia’s economy contracted in the same period.

Shipping through Hormuz has increased during the past two months, according to the people familiar with the matter, but much of that traffic is moving at night under US military protection. Vessels have also been operating with transponders switched off and have faced regular Iranian missile and drone fire, the people said.

Three paths from Salalah

If the Salalah meeting takes place with broad GCC attendance, the first mechanism to watch is whether Oman can turn a diplomatic contact into a limited shipping arrangement. That would ease pressure on global energy supply, give Gulf governments a channel to manage risk, and reduce immediate costs for shipping, insurance and tourism-linked sectors.

If the meeting fails or excludes major Gulf states, the blockade and covert shipping pattern would probably persist under current conditions, keeping energy prices exposed to sudden disruption. If a temporary fee-based framework advances instead, the global macro effect would depend on whether more cargo moves safely, while Gulf governments and energy exporters would weigh higher transit costs against restored volumes.