Re-ignition of the Strait of Hormuz Blockade Crisis: Breakdown of US-Iran Negotiations and Response Strategies for Korean Companies

Executive Summary

With the expiration of the Islamabad Memorandum of Understanding (MoU) on August 17, Iran has shifted to a fully offensive policy stance, while the United States has ruled out an extension of the interim agreement. President Trump's threat to bomb Oman is shaking the only existing mediation channel in the Gulf, posing a variable that threatens the existing cycle of negotiation and tension. The fact that all 11 vessels transiting the strait as of August 11 utilized Iran's unilateral transit system indicates that this system has effectively become the standard route. However, its unstable legal status implies a possibility of abrupt suspension of navigation in the future. The future path requires a dual-track response, centered on the basic scenario of alternating negotiation and tension (55%), while preparing for a transition to a pessimistic scenario (30%). Korean companies should adopt a strategy of not rushing to return to normal shipping routes, reducing reliance on Iran's unilateral transit system, and tracking the continued existence of the Omani mediation channel as a separate indicator.

I. Issue Situation Analysis

Re-ignition of the Strait of Hormuz Blockade Crisis: Issue Situation Analysis

1. Background and Course of the Issue

The starting point of this crisis was February 28, 2026. A full-scale Middle East war began when the United States and Israel launched airstrikes on targets within Iran [2][8]. Since the outbreak of the war, the Strait of Hormuz has been effectively under blockade [8]. Prior to the war, this strait was a shipping route through which approximately one-fifth of the world's crude oil supply passed [7][8].

On June 17, President Trump and the Tehran government signed a Memorandum of Understanding (MoU), referred to as the 'Islamabad Memorandum,' [3][6] which declared an immediate and permanent cessation of military actions on all fronts [13]. Immediately after signing, President Trump posted on social media, "Ships of the world, turn on your engines," expressing confidence in the reopening of the strait [3]. However, SIPRI pointed out that some clauses in the MoU left room for the permanent inclusion of Iran's right to restrict navigation in a final peace treaty [6]. In reality, a ceasefire was achieved once in April but quickly collapsed as attacks within the strait resumed [5][8].

Subsequently, Iran proposed a plan to impose transit fees on vessels [5]. While a practical agreement on dividing control between Iran and Oman was close, it did not lead to a full normalization due to Iran's demands for war reparations, the US's final approval, and the obstruction by Iranian hardliners [8].

2. Current Situation

On August 11, Iran stated that it would maintain the Strait of Hormuz in a closed state unless the United States accepted its conditions [9]. On the same day, vessel attacks occurred in the Gulf of Oman and at the entrance to the Red Sea, key gateways for crude oil supply in the Gulf region [9]. By August 13, two more vessels were attacked, bringing maritime traffic in the strait to a virtual standstill [4][14][15]. The United States warned that it could maintain a naval blockade against Iran indefinitely [4][15].

As of August 11, according to Kpler's data, 14 vessels were transiting the Strait of Hormuz. Of these, 11 utilized Iran's unilateral transit system, and none used the normal TSS (Traffic Separation Scheme) route [7]. While this represents a slight recovery compared to the period when traffic volume plummeted to around 4 vessels per day from the pre-blockade level of 90 vessels, it is still far from a return to normal routes [5].

The 60-day MoU expired on August 17 [11][16]. A senior Iranian official told Reuters, "Entities related to Iran must prepare for the Strait of Hormuz and escalation of tensions in the region," adding, "Iran is ready to make difficult decisions and take action" [1][17]. The Iranian government declared a shift in its policy stance from defensive to "fully offensive" [1][11][17]. Washington stated its position that it would not extend the interim agreement [11].

At the same time, Iran and Oman held separate consultations on future navigation methods within the strait [16]. In response to these consultations, President Trump threatened to bomb Oman if it "interfered" [16]. He also made remarks implying that the Strait of Hormuz could become US territory [16]. Oman's reaction is unusual in that it directly targets a long-standing US mediation partner in the Gulf region. Separately, President Trump claimed that the United States had "complete control" over the Strait of Hormuz [7], but the transit data from the field suggests otherwise [7].

3. Key Actors and Positions

Iran: Has consistently defined control over the Strait of Hormuz as an asymmetric leverage directly linked to regime survival [2]. It maintains its stance of not easing the blockade policy without the withdrawal of US troops and the lifting of sanctions [2]. In the current phase, hardliners are leading the policy shift, hinting at the possibility of executing military options with expressions like "difficult decisions" [1][17]. The proposal to impose transit fees on vessels can be seen as an Iranian compromise to manage the blockade not as a complete shutdown but as a controlled opening [5]. However, the resumption of vessel attacks since mid-August suggests that this compromise approach is being overshadowed by pressure from hardliners [4][9].

United States: Although the Trump administration has lost direct economic motivation for protecting the strait due to increased energy self-sufficiency, it faces a structural dilemma where the impact of a blockade on oil prices still translates into domestic political burdens [2]. In the current phase, while signaling increased economic pressure on Iran [4][14], it has also sent strong signals that a naval blockade could be maintained indefinitely [4][15]. At the same time, the threat to bomb Oman, going beyond pressure on Iran to target a mediator, has the potential to stir anxiety among Gulf allies [16].

Oman: Has positioned itself as a mediator between Iran and the United States, and separately consulted with Iran on future navigation methods in the strait [16]. The fact that these consultations themselves triggered President Trump's backlash places Oman in a situation where the space for regional mediation is rapidly shrinking.

China: As a party suffering from its significant reliance on the Strait of Hormuz for crude oil imports, China maintains a cautious stance on strategic alignment with Iran [8]. The attempt by Iran to increase RMB settlements is less a reflection of enhanced competitiveness in China's financial system and more a consequence of Iran's lack of alternatives after being excluded from the dollar payment network [5][8].

Houthi Rebels: As proxies of Iran, they have expanded attacks in the Red Sea and Bab el-Mandeb Strait in conjunction with the Hormuz negotiation phase [12]. While Saudi Arabia, Turkey, and Pakistan signed the Mecca Defense Pact on August 7 to secure independent deterrence capabilities, it is assessed as a symbolic signal falling short of NATO-style automatic intervention [12].

4. Key Issues

The first issue is whether the navigation restriction clause of the Islamabad MoU will remain a temporary measure or be permanently enshrined in a final peace treaty [6]. Concerns have been raised that if this clause becomes entrenched, it could have repercussions beyond the Gulf region, affecting the principle of freedom of navigation worldwide [6].

The second issue is whether Iran's policy shift will lead to actual military action. The declaration of a "fully offensive" posture could be mere rhetoric to strengthen negotiation leverage [1][17], but given that vessel attacks have already resumed since mid-August [4][9], the possibility of the threat being carried out cannot be dismissed lightly.

The third issue is the potential for the US threat against Oman to destabilize the entire mediation structure in the Gulf region. Given Oman's role as virtually the sole channel of trust between the US and Iran, damage to this channel could shrink the avenues for resuming negotiations [16].

The fourth issue is whether the volatility in oil prices and maritime freight rates will be a temporary shock or become a permanent risk premium. Traffic data indicates an unstable intermediate zone between complete blockade and full normalization is continuing [5][7]. It appears unlikely that the costly phase of alternating negotiation and tension will be resolved in the short term [2].

II. In-depth Issue Analysis

Re-ignition of the Strait of Hormuz Blockade Crisis: In-depth Issue Analysis

1. Analysis of Fundamental Causes

The fundamental cause of this crisis stems from the structural flaws of the Islamabad MoU itself. At the time of its signing in June, the MoU declared an "immediate and permanent cessation of military actions on all fronts" [13]. However, SIPRI pointed out that certain clauses in the MoU left room for the permanent inclusion of Iran's right to restrict navigation in a final peace treaty [6]. The wording, rushed for a superficial resolution, thus sowed the seeds for subsequent interpretive disputes.

From Iran's perspective, the Strait of Hormuz is not a negotiation card but an asymmetric leverage directly linked to regime survival [2]. Iran, at a disadvantage in conventional military power compared to the US, has offset its military inferiority by controlling the strait, through which one-fifth of global crude oil supply passes [2][8]. The statement by a senior Iranian official to Reuters, "Iran is ready to make difficult decisions and take action" [1][17], reflects Iran's calculation that if negotiations fail, the only recourse is control of the strait.

The fundamental cause on the US side is the change in its energy self-sufficiency structure. An EAI report analyzes that "the US has lost direct economic motivation for protecting the strait due to increased energy self-sufficiency, but faces a structural dilemma where the impact of a blockade on oil prices still translates into domestic political burdens" [2]. This means Washington lacks strategic urgency for normalizing the strait while simultaneously bearing the political cost of soaring oil prices. President Trump's assertion of "complete control" over the Strait of Hormuz [7], and even his remarks suggesting its incorporation as US territory [16], can be interpreted as evidence of his anxiety over losing control.

2. Structural Context

Political Structure

Within Iran, the influence of hardliners acts as a constant factor. Despite being close to a practical agreement on dividing control between Iran and Oman, the deal failed to achieve full normalization "due to Iran's demands for war reparations, the US's final approval, and domestic political obstruction by Iranian hardliners" [8]. The declaration of a policy shift to "fully offensive" [1][11][17] can be seen as a signal that the position of the negotiation faction has weakened.

On the US side, the threat to bomb Oman is unusual [16]. Oman has long been a US mediation partner in the Gulf region. Washington's backlash against the Iran-Oman consultations on strait navigation methods [16] signifies that the US perceives any situation where a mediator independently designs navigation order as a loss of control. Threatening Oman, an ally and mediator, indicates that the Trump administration's negotiation strategy is narrowing to a sole focus on military coercion.

Economic Structure

The changes in strait traffic volume illustrate the economic reality of this crisis. Traffic volume, which was 90 vessels per day before the blockade, plummeted to around 4 vessels after the war began [5]. By August 11, it had slightly recovered to 14 vessels, but 11 of these used Iran's unilateral transit system, with none using the normal TSS route [7]. This indicates not a normalization of traffic but rather that shipping companies are conforming to the alternative order designed by Iran.

The phenomenon of expanding RMB settlements within this alternative order is also a derivative of the same structure. An EAI analysis characterizes this as "less a reflection of enhanced competitiveness in China's financial system and more a consequence of Iran's lack of alternatives after being excluded from the dollar payment network" [5]. China, also a victim party heavily reliant on the Strait of Hormuz for crude oil imports, maintains a cautious stance on strategic alignment with Iran [8]. The proposal for transit fees [5] and the expansion of RMB settlements are both closer to temporary measures arising from the blockade situation rather than normal market order.

Security Structure

The crisis in the strait is not an isolated variable but is intertwined with the broader realignment of the Gulf security landscape. The Houthi rebels' expanded attacks in the Red Sea and Bab el-Mandeb Strait are a "structural event resulting from the convergence of three layers: Iran-Oman Hormuz negotiations, the Saudi-Turkey-Pakistan Mecca Defense Pact, and the Yemen civil war" [12]. Iran is using it as a "low-cost leverage to maintain negotiation power through the Houthis, without direct intervention, while holding negotiation cards in the Strait of Hormuz" [12]. Indeed, the simultaneous vessel attacks on August 11 in both the Gulf of Oman and at the entrance to the Red Sea [9] demonstrate that this multi-layered pressure strategy is operational. The signing of the joint defense pact by Saudi Arabia, Turkey, and Pakistan in Mecca on August 7 [12] is also part of the regional security realignment triggered by the Hormuz crisis.

3. Historical Precedents and Comparison with Similar Cases

The most relevant precedent to the current crisis is the experience of the ceasefire collapse in April. The ceasefire, achieved once in April, quickly collapsed as attacks within the strait resumed [5][8]. The expiration of the MoU in August is repeating the same pattern. This indicates that the cycle of temporary containment and renewed conflict is solidifying not as an isolated incident but as the fundamental rhythm of this conflict.

The case of the Houthi threat to Red Sea and Bab el-Mandeb routes targeting Israel-related vessels during the Gaza War is also worth considering. At that time, global shipping companies suspended Red Sea navigation and opted for the Cape of Good Hope detour [12]. The current sharp decline in traffic volume in Hormuz and the concentration on Iran's unilateral transit system [7] show a similar response pattern to the Red Sea case, where shipping companies either avoid routes or accept forced alternative routes in response to risks.

However, there is a crucial difference between the two cases. The Red Sea crisis had an alternative route (Cape of Good Hope), making physical avoidance possible. In contrast, the Strait of Hormuz is a bottleneck with virtually no alternative routes. Due to this geographical difference, a blockade of Hormuz has a much more direct and immediate impact on oil prices and maritime freight rates than the Red Sea case.

4. Key Variables Shaping Issue Development

The first variable is the balance of power between Iranian hardliners and negotiation factions. The declaration of a "fully offensive" policy shift [1][11][17] will determine the future path, depending on whether it is a temporary pressure tactic or a signal that hardliners have fully seized control.

The second variable is whether Oman continues its role as a mediator. If Oman proceeds with separate navigation consultations with Iran despite President Trump's threat of bombing [16], there is a possibility that an independent navigation order will be created within the Gulf region, excluding the US. This scenario would fundamentally undermine the US's control over the strait.

The third variable is the final interpretation of the Islamabad MoU clauses. Depending on whether the navigation restriction clause pointed out by SIPRI [6] is permanently enshrined in a final peace treaty or replaced by a multilateral navigation safety management system, it will be determined whether this crisis ends as an isolated conflict or becomes a permanent new normal.

The fourth variable is the extent of the multi-front pressure mediated by the Houthis. If the Hormuz negotiations completely break down, there is a possibility that attacks will expand to Saudi Arabia's eastern infrastructure as a whole [12]. This suggests the potential for the crisis to spread from the single point of the strait to the entire Gulf region.