Iran blocks US Hormuz reroute as Brent holds near $88

Iran's parliament speaker rejected US plans to reroute Hormuz shipping through the southern line, keeping the strait's oil risk premium intact.

Iran's parliament speaker rejected US attempts to reroute Strait of Hormuz shipping through the southern line, keeping the waterway that carried one-fifth of global oil trade restricted and Brent crude near $88 a barrel.

"The dominance of the fighters of Islam over this strategic waterway is completely decisive," the Islamic Revolutionary Guard Corps Navy said in a statement carried by Iranian broadcaster IRIB, rejecting repeated US claims that the strait had reopened.

Mohammad Bagher Ghalibaf, Iran's parliament speaker and lead negotiator, said Sept. 1 that Washington's push to move vessels through the southern line violated the lapsed Islamabad memorandum, mocking US attempts to manipulate "paper oil markets." Daily transits through the strait have fallen to single digits from roughly 140 before the war began Feb. 28, according to Al Mayadeen, while Brent has climbed about 22 percent since then, from $72 to $88 a barrel.

The standoff keeps the risk premium embedded in global energy prices, with Iran's annual inflation at 66 percent and imports and exports down nearly 35 percent because of US sanctions and a naval blockade. Tehran says the strait will not fully reopen until Washington lifts sanctions, releases frozen assets, begins investment and ends the war in Lebanon — conditions tied to the June Islamabad memorandum that collapsed after the US renewed attacks July 8.

Southern-route dispute deepens the chokepoint standoff

Ghalibaf's rejection came as Iran and Oman pursued a separate track toward a temporary jointly managed shipping corridor, with talks covering mine clearance and a 30-to-60-day negotiating period toward a permanent maritime arrangement. Deputy Foreign Minister Kazem Gharibabadi said the understanding with Muscat does not constitute a general reopening, and that any vessel seeking to cross must coordinate with Iran.

The US position rests on claims that the southern route is operating smoothly while the northern line is ineffective — assertions Tehran's security sources call a ploy to control energy prices. Ship-tracking firms report no crude shipments visible through the strait, in contrast to the hundreds of vessels that traversed it daily before the war. The International Maritime Organization said up to 400 ships carrying about 6,000 seafarers have been unable to leave the Gulf safely since the conflict began.

Oil windfalls meet rising Gulf exposure

The disruption has delivered a windfall to producers while exposing US energy companies' regional assets. Chevron reported its highest quarterly profit in six years, $12 billion in adjusted earnings on July 31, with the Gulf accounting for just 5 percent of its global output. ExxonMobil, by contrast, saw upstream earnings drop about $1.3 billion in the first half of 2026 versus a year earlier as lower volumes from Qatar and the UAE — 20 percent of its global equity upstream supply — offset higher commodity prices, according to Rahul Choudhary, vice president of upstream research at Rystad Energy.

Iran and Iran-backed groups have carried out at least 172 attacks on nonmilitary infrastructure across the six Gulf Cooperation Council countries since Feb. 28, with oil and gas facilities, power plants and desalination plants accounting for nearly half of all strikes, according to the Armed Conflict Location and Event Data project. Attacks on Qatar's Ras Laffan LNG hub, where ExxonMobil and ConocoPhillips hold stakes, damaged roughly 13 million tonnes of capacity that could take three to five years to restore at a repair cost of about $3 billion, Choudhary said.

US gasoline prices have risen sharply, with President Donald Trump urging Americans to accept slightly higher fuel costs as the war continues. The last time the strait faced sustained closure pressure, transits fell to single digits from a pre-war baseline of about 140 vessels a day, a collapse that has kept shipping insurance costs elevated across the Gulf.

With the Islamabad memorandum lapsed and US attacks renewed July 8, the path to reopening runs through Washington's compliance with Tehran's conditions. If the US returns to the memorandum, Iran has said it will open the strait; if not, the restricted waterway keeps supporting elevated crude prices and shipping insurance costs across the Gulf.

This article is for informational purposes only and does not constitute investment advice.