Oman has proposed a Gulf-backed plan to Iran aimed at managing the Strait of Hormuz and introducing voluntary fees for vessels transiting the vital waterway, according to a Gulf source and a Western diplomat. The initiative seeks to address the ongoing disruptions to shipping caused by escalating tensions between the United States, Israel, and Iran.

The proposal envisions shared management of the strait, with Iran overseeing one-way shipping along its side and Oman, which controls the opposite shore, managing part of the opposite flow. Fees collected would be voluntary, modeled after systems such as those in the Strait of Malacca, where surrounding countries request voluntary contributions from shipping companies to support navigation safety and environmental protection.

A U.S. official rejected any arrangement involving tolls or fees, emphasizing that the Strait of Hormuz is an international waterway that must remain free from Iranian control or restrictions. Washington is seeking a return to the pre-conflict status quo, where vessels transit without paying charges, and has labeled mandatory fees as illegal under international law.

The backdrop to the proposal includes a recent series of violent exchanges. Following a joint U.S.-Israeli campaign that began in February, Iran effectively closed the strait to foreign vessels. A partial reopening occurred in June after the United States and Iran reached a tentative agreement, but tensions reignited in early July when Iran targeted ships transiting routes it did not authorize.

Hostilities escalated further with Iran launching multiple ballistic missiles targeting U.S. forces in the Middle East on July 28, all of which were intercepted, according to U.S. Central Command. Saudi Arabia reported intercepting and destroying several drones aimed at its oil infrastructure, attributing the attacks to Iran-backed militias operating from Iraqi territory. Additional drone incidents occurred in Jordan, northern Iran, and Saudi Arabia over the past days.

In parallel, Iran’s Deputy Foreign Minister Kazem Gharibabadi detailed Tehran’s proposal to Oman for joint strait management, clarifying that Iran would not seek exclusive control. The Gulf Cooperation Council foreign ministers held a video meeting on July 28 to discuss developments related to maritime security and the freedom of navigation through the strait.

Iran’s joint military command dismissed a U.S. proposal, put forth by President Donald Trump, to compensate vessel owners for damages using frozen Iranian assets, warning that any country or company accepting such payments would be barred from the strait.

Complicating regional stability further, the Iran-aligned Houthis in Yemen declared a blockade of Saudi ports on the Red Sea on July 20 and fired ballistic missiles at a Saudi oil tanker on July 28, forcing it to turn back.

Last weekend, Trump abruptly halted a two-week U.S. bombing campaign against targets in Iran following advice from military commanders, citing diminishing returns. The airstrikes resulted in significant Iranian casualties and infrastructure damage. Iran responded with attacks on U.S. bases in neighboring countries, killing four U.S. service members, and targeted civilian infrastructure in Gulf states.

In a July 28 interview ahead of a meeting with Israeli Prime Minister Benjamin Netanyahu, Trump described the U.S. position as strong but reiterated a preference to avoid further strikes. He also reiterated a threat to destroy Iran’s deeply buried nuclear facility at Pickaxe Mountain if diplomatic efforts fail. Iran denies seeking renewed negotiations and accuses the United States of violating recent accords aimed at ending the conflict.

The cessation of American airstrikes led to an approximately 8% drop in oil prices on July 27, a downward trend that persisted the following day. Meanwhile, ongoing diplomacy and military maneuvers continue to shape the security landscape surrounding the Strait of Hormuz and the wider Gulf region.