Iran-US MOU includes provisions on future Strait of Hormuz transit arrangements

A memorandum of understanding (MOU) signed between Iran and the United States contains provisions relating to shipping through the Strait of Hormuz, according to the text read out by U.S. officials. The agreement, which also includes sanctions relief for Iranian oil sales, outlines a framework for future discussions on the strait's status but does not immediately impose any toll or fee on vessels.

Under the MOU, the United States will fully end its naval blockade within 30 days and terminate all sanctions on Iran according to an agreed schedule. During this period, the U.S. Department of the Treasury will issue waivers for exports of Iranian crude oil and petroleum products. The wording of these waivers will clarify whether sanctions on ships carrying Iranian oil are also lifted. Traffic through the strait is expected to be proportional to pre-war levels during the 30-day transition.

For the first 60 days, Iran has undertaken to facilitate the transit of vessels free of any charge. It will also remove technical and commercial obstacles, including mines, within 30 days to allow vessels to begin transiting. After this period, Iran will negotiate with Oman, another key littoral state, to define future administrative and maritime services. Iran has previously indicated it intends to charge for such services.

Other Persian Gulf states – including Qatar, Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates – will be involved in discussions on the future status of the strait. Some of these nations have historically opposed any toll. International shipping interests, including India, have also opposed tolls.

The MOU states that future arrangements will be in accordance with international law. The key body of law governing shipping, the United Nations Convention on the Law of the Sea (UNCLOS), has not been ratified by the United States; Iran has signed but not ratified it. UNCLOS provides for transit rights through straits used for international navigation and generally prohibits levying tolls, though it allows for fees for specific services.

The agreement provides for a separate massive reconstruction fund for Iran, in addition to oil-sale revenues. While Iran had previously presented a toll on the Strait of Hormuz as a means of funding post-war reconstruction, the MOU does not specify such a toll. However, a formal agreement recognising Iran as a stakeholder in the strait would align with Iran's longstanding position that it holds a strategic interest in the waterway.