JUANA SUMMERS, HOST:
A fifth of the world's oil used to pass through the Strait of Hormuz. Today, it's a fraction of that. Iran's control of the waterway remains a potent weapon in this conflict. For more on what lies ahead, we're joined by NPR's Tom Bowman and Aya Batrawy, who is in Dubai. Hi there.
TOM BOWMAN, BYLINE: Hello.
AYA BATRAWY, BYLINE: Hey.
SUMMERS: Tom, I want to start with you. Just help us understand what the memorandum of understanding that was signed between the U.S. and Iran last month says about how the Strait of Hormuz should be managed.
BOWMAN: Well, this temporary agreement signed three weeks ago says Iran will ensure safe passage of commercial vessels with no charge for 60 days. So I'm guessing anyone who's reading this, especially the Iranians, are thinking, well, after 60 days, I can start charging. That seems to be a big loophole here, Juana. Also, the memorandum says that Oman and Iran will work to define the, quote, "future administration in maritime services" in the Strait of Hormuz.
So, you know, what does that mean in practical terms? Oman is now saying it wants ships to pay a voluntary service fee for transiting the Strait, while Iran is saying that it reserves the right to impose insurance fees, which would be required. Of course, before the war, there was free passage through these international waters. One industry analyst told me, freedom of the seas means free.
SUMMERS: And, Aya, Tehran's been saying sovereignty over the strait lies with Iran and Oman. What's the idea there?
BATRAWY: Yeah, so Iran has been really clear that management of the Strait of Hormuz will not return to what it was before the war. And they struck two cargo ships just last week because those ships were using a route near Oman that wasn't cleared or approved by Iran's Revolutionary Guard. So their control over this waterway not only pushed oil prices up globally during the war, inflicting pain internationally, it also forced the U.S. to draw down its strategic oil reserves to their lowest levels since 1984.
Now, as for the future of the Strait, the U.S. and Gulf Arab states, including Oman, reject tolls being imposed on ships, but we are seeing Iran and Oman discuss the proposal of service fees, like you just heard Tom talking about. Now, Oman's foreign minister says, this would be a voluntary payment from shipping companies to enhance navigational safety, emergency preparation in the strait. Oman's compared this to the system that's already in place in the Strait of Malacca in Southeast Asia. And what's fascinating about this is that Qatar's defense minister, whose country relies on the Strait of Hormuz to export most of its liquefied natural gas, said back in late May that they're open to negotiating temporary fees that get the strait reopened and cleared of mines.
SUMMERS: Tom, I want to ask you, on that question of demining of the strait, of making it safe for international shipping, what can you tell us?
BOWMAN: Well, the U.S. has created a pathway off Oman for ships to transit the strait. So not near Iran - this is the southern side of the strait, and demining activities are ongoing. Many of the 40 or so ships that pass each day are using this Oman route rather than going along the Iranian coast. The U.S. is looking to expand this pathway to increase ship traffic. That - again, it was roughly 130 ships each day. The U.S. Navy is not guiding ships, but just in the area and also asking ship owners to notify them before passage.
SUMMERS: Aya, what are Gulf Arab states saying about all of this? Is this just, like, the new normal for them to seek Iranian authorization to get their oil out?
BATRAWY: So, you know, even though we keep hearing President Trump say the goal of all of this is to block Iran from ever building a nuclear weapon, that is actually not top of the mind for Gulf Arab states right now. Their immediate concern is Iran's missiles and drones and whether these countries can get their oil shipped out of the strait. Also in Dubai, where I am, you know, they rely here on the strait for the import of food, all the stuff you see in the malls here and raw materials for the endless construction projects.
And there's another critical issue at hand here, Juana. I spoke with former U.S. ambassador to Saudi Arabia Michael Ratney, who explained that Gulf Arab states are facing a kind of economic choke point with the strait because on the one hand, while oil has plummeted to around $72 a barrel now with this U.S.-Iran deal signed, with prices that low, they need to be exporting all the oil they can.
MICHAEL RATNEY: So we're in this very ticklish moment right now - right? - where there's a tit for tat between the U.S. and Iran. So that puts the Saudis - and I think the Emirates as well - in a very difficult situation because if oil's in the 70s, it makes it even more important that they have unfettered export capacity. And if the U.S. can't solve that, they're going to have to figure out their own way to solve it.
BATRAWY: And he says that Trump's unpredictability has pushed the Saudis, Emirates, the Qataris, to make their own deals with Iran. Today, the Saudis even sent someone to the funeral of Iran's supreme leader who was killed by Israeli strikes in the war.
BOWMAN: And, Juana, also, two countries that haven't been able to make deals yet are Bahrain and Kuwait, where U.S. bases are located in which were attacked by Iran just last week. You know, a friend of mine who's a retired colonel asked me the question, you know, why do you - why do the headlines keep saying, ceasefire in jeopardy, or something like that? And he's right. When both sides are firing - you know, the U.S. recently destroyed Iran's military sites, and again, Iran responds by hitting those U.S. bases. So, you know, how can you still call this a ceasefire? It's more like at least ceasefire violations or maybe low-level skirmishes but clearly not a full-scale war like we saw in April.
SUMMERS: NPR's Tom Bowman and Aya Batrawy, thank you.
BOWMAN: You're welcome.
BATRAWY: Thanks. Transcript provided by NPR, Copyright NPR.
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