Tehran’s flat rejection of a regional deal to share control of the Strait of Hormuz has crushed hopes for calm in the Gulf, just as fighting flares up again on multiple fronts.

A senior Iranian official told Reuters on Wednesday that Oman’s proposal for joint management of the strait has “no chance of success.” Iran wants full control of inbound traffic and part of the outbound route too, rejecting any 50-50 split with Oman.

What happened

Oman had floated a plan, backed by Gulf states, to let ships pay voluntary fees for using the strait – similar to the system Indonesia, Malaysia and Singapore run on the Strait of Malacca. Iran said no. Hours later, Iran’s Revolutionary Guards claimed they struck three oil tankers for taking an “unsafe and illegal route.” 

The U.S. and Saudi Arabia hit Iran-backed targets in eastern Iraq the same day, and Iran says it fired ballistic missiles at U.S. bases in Jordan – five of which Jordan’s military says it shot down.

Market reaction

Oil jumped more than $3 a barrel on Wednesday as the violence escalated.

About a fifth of the world’s oil and LNG passed through Hormuz before February’s attacks. Every strike, threat, or failed negotiation here moves crude prices in real time, and with talks now collapsed, the volatility isn’t going away.

What to watch next

Whether Washington and Riyadh escalate further in Iraq, and if Iran follows through on threats against U.S. forces – either could send oil sharply higher.

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Source: Reuters