Iran-US talks advance but Hormuz dispute keeps 21% of oil at risk

Renewed diplomatic efforts to resolve the US-Iran conflict have narrowed some differences, but critical disputes over Iran’s enriched uranium stockpile and control of the Strait of Hormuz continue to fuel market volatility. The strait, a vital artery for about 21 percent of the world's oil supply, remains the central point of contention in negotiations mediated by Pakistan and Qatar.

“There’s been some progress. I wouldn’t exaggerate it. I wouldn’t diminish it,” US Secretary of State Marco Rubio told reporters after a NATO meeting in Sweden. “There's more work to be done. We're not there yet. I hope we get there.”

The uncertainty sent oil prices climbing Friday, while the US dollar hovered near a six-week high as investors weighed the prospects of a breakthrough. Iran’s foreign ministry spokesman, Esmaeil Baghaei, signaled that differences with Washington remain “deep and significant,” cautioning that diplomacy “takes time.”

At stake is the stability of the global energy supply and the risk of a wider conflict in the Middle East. A failure to secure an agreement could see a return to hostilities that began on February 28, while a successful deal could lower oil prices and reduce geopolitical risk premiums that have built up in the market.

Mediation Efforts Intensify

Pakistan and Qatar have stepped up their roles as key intermediaries. Pakistan’s Army chief, Field Marshal Asim Munir, arrived in Tehran on Friday, carrying messages from Washington, according to sources familiar with the talks. His visit followed a second meeting between Pakistani Interior Minister Mohsen Naqvi and Iranian Foreign Minister Abbas Araghchi. Separately, Qatar, a skilled regional mediator, dispatched its own negotiating team to Tehran to help bridge the gaps.

Iran’s proposal, submitted to mediators earlier in the week, reportedly offers to reopen the Strait of Hormuz in exchange for a phased lifting of US sanctions, the return of frozen assets, and compensation for war damages. Tehran is also seeking to defer all discussions on its nuclear program.

Hormuz Tolls and Uranium Stockpile Remain Sticking Points

Two major obstacles threaten to derail the talks. The first is Iran’s demand to control traffic and impose tolls on ships passing through the Strait of Hormuz via its proposed Persian Gulf Strait Authority (PGSA). The US has flatly rejected this. “Iran is trying to create a tolling system... There is not a country in the world that should accept that,” Rubio said.

This move has also been met with stiff opposition from regional states. Five Gulf countries—Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE—sent a formal letter to the International Maritime Organisation warning that Iran's plan is an attempt to control the waterway for monetary gain.

The second major hurdle is the fate of Iran’s stockpile of highly enriched uranium. The US has demanded the material be transferred out of the country, a condition Iran has so far refused. Two senior Iranian sources told Reuters that Supreme Leader Ayatollah Mojtaba Khamenei had personally directed officials not to send the stockpile abroad.

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