Iran-Oman Strait of Hormuz Deal Stalls on Sanctions, Insurance Clause

Reporting on Aug. 7, BlockBeats cited Reuters in saying that four industry sources described a proposed Iran-Oman agreement as difficult to carry out. The pact would give Tehran control over vessels entering the Gulf via the Strait of Hormuz, but US sanctions combined with restrictive insurance language on any payments stand in the way. Any toll or fee would trigger serious compliance problems, the sources said, because the United States has sanctioned the Persian Gulf Strait Authority, the Iranian entity that runs the waterway. The US Treasury has additionally banned US personnel from accepting services from the Iranian government tied to 'safe passage.' Any payment, industry sources warned, could lead to asset freezes. Complicating matters further, the Lloyd's Market Association introduced a clause in late July for war risk underwriters: if a ship pays a transit fee, toll or other charge to pass through the strait, its cover is terminated. An insurance industry source said shipping companies face a true dilemma, since Lloyd's clause prevents insurers from covering owners who make such payments, while Iran wants the tolls collected. Both elements -- the sanctions regime and the insurance clause -- make implementation all but impossible, they said.