Iran keeps Hormuz Strait closed until US meets deal conditions

The Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world’s oil and liquefied natural gas supply flows, remains closed to commercial shipping. Iran confirmed on August 18 that it will not reopen the strait until the United States satisfies a list of conditions outlined in a June memorandum of understanding that has since collapsed.

What Iran wants

Iranian negotiator Mohammad Baqer Qalibaf laid out the terms plainly. Iran is demanding the lifting of the US naval blockade of Iranian ports, the unfreezing of Iranian assets, an end to sanctions, war compensation, and a cessation of US support for attacks on Iranian allies.

The US has refused these proposals, making any near-term resolution look unlikely.

The closure traces back to February 28, 2026, when Iran shut down the strait following US-Israeli military strikes. In the months since, ceasefires and partial reopenings occurred intermittently from April to August 2026 before disputes pulled the gate shut again.

The most promising diplomatic effort was the June 17 interim memorandum of understanding, which established a 60-day window for free commercial passage. That framework fell apart over disagreements about who controls the waterway and under what terms. By mid-August, the deal’s remnants were functionally irrelevant.

A strait that moves the global economy

The Strait of Hormuz sits between Iran and Oman, connecting the Persian Gulf to the Gulf of Oman and, from there, the open ocean. Nearly every barrel of oil exported from Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE passes through this corridor.

When the strait is open, about one-fifth of the world’s oil supply transits through a channel roughly 21 miles wide at its narrowest point.

By mid-August, ship transits through the strait hit record lows. On one particularly stark day, only two vessels were observed passing through. Reported attacks on ships have intensified amid the unresolved disputes.

Six months of escalation

After the initial closure in late February, sporadic ceasefire agreements between March and April allowed limited commercial passage. Each reopening was partial and temporary, with both sides accusing the other of violations.

The June MOU was supposed to break the pattern. The 60-day free-passage window was meant to build trust while negotiators hashed out longer-term arrangements. Instead, disagreements over operational control of the strait torpedoed the framework before it could take hold.

What this means for energy markets and beyond

The ongoing closure has severe implications for the global oil market, driving prices upward as supply concerns mount. With the strait responsible for roughly one-fifth of the world’s energy transit, continued disruption particularly affects Asian economies heavily dependent on Gulf crude imports.

Alternative shipping routes exist, but sending tankers around the southern tip of Africa instead of through the strait adds weeks to delivery times and significantly increases costs. Pipeline alternatives can handle only a fraction of the volume that normally moves by sea.

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