Iran warns UK, France on Hormuz as oil flows near 10 million barrels

Iran warned the UK and France against interfering in the Strait of Hormuz, Mehr News Agency reported, threatening a fragile recovery in oil flows through the waterway that handles about a fifth of the world's crude supply.

"The free and unimpeded passage of international shipping through the strait is a matter of international law, not a matter for negotiation," Bahrain's government said in a statement, reflecting Gulf Arab opposition to any toll or fee system that Iran and Oman have discussed privately with European officials.

The warning comes as Brent crude trades near $72 a barrel and West Texas Intermediate near $69, down sharply from crisis peaks but still carrying a geopolitical risk premium that could expand rapidly if shipping through the chokepoint is disrupted again. Daily flows through the Strait of Hormuz have climbed back above 10 million barrels, supported by a recovery in Gulf exports and the lifting of the US naval blockade on Iranian ports, which allowed Iran's crude exports to surge past 40 million barrels.

At stake is the future governance of a waterway that carried about 20 million barrels of oil and liquefied natural gas daily before the US and Israeli bombardment of Iran began in late February. The Islamic Republic effectively shut the strait at the start of the conflict, triggering a surge in energy prices and supply shortages that only began to ease after Washington and Tehran signed an interim peace deal roughly two weeks ago. That agreement triggered a 60-day negotiating period to resolve issues including Iran's nuclear program and billions of dollars in frozen funds.

European powers caught between Iran and Gulf allies

The UK, France and other European nations have pressed Iranian and Omani officials not to discriminate against ships based on their nationality, according to people familiar with the private deliberations. They have also pushed for an international maritime coalition to help clear mines in the strait, though its deployment depends on progress toward a permanent peace deal.

Oman, which borders the southern part of the strait and maintains alliances with both the West and Iran, has told European officials there is no returning to the pre-war status quo. The sultanate is studying the Malacca strait model — where Indonesia, Malaysia and Singapore charge vessels for navigation and security services through a voluntary fund that raised about $22 million over a decade — as a potential template, one person said. Omani leaders believe such a system would only work if all Persian Gulf states accept it.

Privately, some Gulf Arab officials have indicated a willingness to accept some form of service fee in the name of de-escalation, though no nation has formally endorsed the idea. The US and Gulf countries continue to insist that neither Iran nor Oman can impose charges of any kind, citing international maritime law and the risk of creating a precedent for other strategic waterways.

Oil market remains headline-sensitive

The diplomatic friction is playing out as US negotiators Steve Witkoff and Jared Kushner traveled to Doha this week for indirect talks between Washington and Tehran. President Donald Trump said Wednesday that negotiators had made progress, saying "we're getting along very well." But the talks faced a rocky start after a series of clashes over the strait late last week.

For oil markets, the risk is asymmetric. Brent crude has fallen from panic levels as supply confidence improved, but any renewed military incident, tanker seizure or breakdown in negotiations could quickly rebuild the war premium. The last time the strait was effectively closed — during the Iran-Iraq war in the 1980s — oil prices more than doubled within months, though the current market has more spare capacity and strategic reserves to cushion a disruption.

The next major catalyst will be whether the Qatar-mediated talks can produce a durable agreement on navigation and security before the 60-day negotiating window expires. If they fail, the warning to the UK and France may be only the first of many diplomatic confrontations over one of the world's most critical energy chokepoints.

This article is for informational purposes only and does not constitute investment advice.