Iran's Announced Restricted Zone in the Gulf and Analysis of Hormuz Navigation Risks

Executive Summary

Iran's Supreme National Security Council has announced its intention to declare a restricted zone near the Strait of Hormuz. This move is assessed not as an impromptu reaction to the expiration of the Islamabad Memorandum, but as a policy direction that was already conceived during the memorandum's negotiation process. The credibility of this declaration is supported by the precedent of the Persian Gulf Strait Authority blacklisting 45 vessels and the recurrence of armed clashes between U.S. forces and the Islamic Revolutionary Guard Corps (IRGC). The most likely scenario for the next six months involves a cycle of negotiations and localized clashes, with the possibility of escalation hinging on the survival of the Omani mediation channel. South Korean companies should not rush to resume normal shipping routes, should reduce their reliance on Iran's unilateral transit system, and must manage the risks of U.S. demands for sanctions compliance and Iran's blacklisting as separate issues.

I. Situational Analysis

Situational Analysis: Iran's Announced Restricted Zone in the Gulf and Hormuz Navigation Risks

1. Background and Developments

The current phase began on February 28, 2026. A full-scale conflict in the Middle East started when the United States and Israel launched airstrikes on targets inside Iran [8][12]. Since the outbreak of the war, the Strait of Hormuz has been under a de facto blockade [8][12]. Prior to the war, this strait was a critical route through which about one-fifth of the world's crude oil and LNG supply passed [8][12][15].

On June 17, President Trump and the Tehran government signed the Islamabad Memorandum [6][9]. It stipulated an immediate and permanent cessation of military actions on all fronts [9]. Immediately after signing, President Trump posted on social media, “Ships of the world, turn on your engines” [9]. However, the memorandum expired on August 17, after which Iran shifted to a more aggressive policy stance [6][9].

SIPRI has pointed out that the wording of a specific clause in the Islamabad Memorandum suggests the United States may have allowed Iran, as part of a final peace treaty, the authority to permanently restrict freedom of navigation in the Strait of Hormuz [2]. If this interpretation is correct, it means the recent declaration of a restricted zone is not an impromptu threat but rather a result conceived during the memorandum's negotiation process [2]. SIPRI warned that such a development could have economic, political, and legal repercussions extending beyond the Gulf region [2].

Following the memorandum's expiration, Iran's Persian Gulf Strait Authority blacklisted 45 vessels, including a tanker owned by Sinokor Merchant Marine [3]. As of August 11, all 11 vessels that transited the strait were found to have used Iran's unilateral transit system [9]. This transit system, which lacks a legal basis, has thus become the de facto standard route [3][9].

2. Current Situation

On September 6 (local time), local and regional media outlets such as Gulf News and Haaretz widely reported remarks by Mohsen Rezaei, Secretary of Iran's Supreme National Security Council [1][14]. Secretary Rezaei stated, “A restricted zone will be declared outside the Strait of Hormuz in the coming days,” adding, “This zone will start from the U.S. Navy's blockade line and include parts of the Persian Gulf” [1][4][16]. He also warned that any vessel entering this zone would be added to Iran's sanctions list [14][16].

At the same time, the Iranian government also announced a gasoline price hike for high-consumption users [1][17]. This is interpreted as a measure to distribute the domestic burden amid intensified U.S. economic sanctions against Iran [1][17].

Military clashes are escalating in parallel. On September 5, U.S. Central Command (CENTCOM) announced that it had struck three Iranian vessels, including an oil tanker near Kharg Island [12]. Prior to this, Iran's Islamic Revolutionary Guard Corps (IRGC) claimed to have launched ballistic missile attacks on two U.S. warships [12][14]. U.S. Navy Admiral Brad Cooper warned, “If the IRGC shoots at two of our ships, we will neutralize three of theirs at a higher economic cost” [16]. Iran has threatened a “faster and more intense response” to any further attacks [13][17]. Canada's The Globe and Mail reported that after two tankers were hit in early September, U.S. forces conducted another airstrike on Iranian targets [10]. The report analyzed that this strike raised concerns that the six-month-long stalemate could be reignited [10][15].

The International Maritime Organization (IMO) stated that it is continuously monitoring the situation out of concern for the safety of the more than 20,000 seafarers operating in the region [11]. It added that there are also crew members stranded on vessels unable to exit the strait [11].

In Yemen, clashes between Saudi-backed government forces and Iran-backed Houthi rebels have resulted in over 140 deaths [13]. This demonstrates that the direct conflict between Iran and the United States is simultaneously inflaming proxy war fronts in the region [13].

3. Key Actors and Positions

Iran's Supreme National Security Council (Mohsen Rezaei): Frames the declaration of the restricted zone as a countermeasure to the U.S. Navy's blockade [1][4]. By linking the zone's establishment with sanctions on vessels, it is signaling that Iran will exercise de facto control over transit [14][16]. Concurrently, it is making a domestic political choice to partially shift the financial pressure from U.S. sanctions onto consumers by raising domestic fuel prices [1][17].

Islamic Revolutionary Guard Corps (IRGC): Functions as the primary military actor, leading missile attacks against U.S. warships [12][14]. Iranian state media reported that the IRGC struck a U.S. aircraft carrier and destroyer with cruise missiles [14].

U.S. Central Command (CENTCOM): Is responding with precision strikes against Iranian tanker fleets, openly stating that it is targeting Iran's oil export capabilities [12][16]. Admiral Cooper's remarks suggest a willingness to escalate beyond proportional responses [16].

U.S. Administration (President Trump): Encouraged the resumption of navigation when the Islamabad Memorandum was signed, but has shifted to a hardline stance since its expiration, ordering new airstrikes [9][10]. Domestically, rising oil prices are reportedly becoming a liability for his approval ratings [10].

China: According to previous EAI analysis, China has little real incentive to defect from Iran during the sanctions period, as it structurally accounts for over 80% of Iran's crude oil imports [6]. The U.S. has also engaged in selective enforcement, exempting major Chinese banks from its 'Operation Economic Outcast' sanctions [3].

South Korea (Shipping industry, including Sinokor Merchant Marine): A tanker owned by a South Korean shipping company is already on the blacklist of Iran's Persian Gulf Strait Authority [3]. The country faces the possibility of being simultaneously pressured on two separate tracks: U.S. demands to comply with sanctions and negotiations with Iran to be removed from the blacklist [3][6].

International Maritime Organization (IMO): While not a direct party to the conflict, it plays a role in monitoring the situation and providing information to the international shipping community, citing the safety of over 20,000 seafarers [11].

4. Key Issues

The first issue is the legal status of the restricted zone. The zone Iran intends to establish, using the U.S. Navy's existing blockade line as its baseline, directly conflicts with the principle of freedom of navigation on the high seas under international law [1][2]. SIPRI believes the wording of the Islamabad Memorandum itself could potentially be used to retroactively justify such a restriction [2].

The second issue is the pace of military escalation. With tanker attacks and U.S. retaliatory airstrikes recurring on a weekly basis, the low-intensity stalemate that held for six months is increasingly likely to shift to a high-intensity phase [10][13]. Admiral Cooper's warning of a response exceeding proportionality reinforces this concern [16].

The third issue is the selective enforcement of sanctions. An asymmetric situation persists where the U.S. exempts Chinese banks while a vessel owned by a South Korean company is blacklisted by Iran [3][6]. This means South Korean companies are at risk of being simultaneously exposed to two conflicting pressures: U.S. demands for sanctions compliance and negotiations with Iran for delisting [3][6].

The fourth issue is the sustainability of the transit system. Although Iran's unilateral transit system has become the de facto standard route, its lack of a legal basis means it carries the potential for an abrupt suspension of operations at any time [3][9]. The recent announcement of a restricted zone could be the trigger that materializes this instability.

II. In-Depth Analysis

In-Depth Analysis: Root Causes and Structural Context of the Restricted Zone Declaration

1. Analysis of Root Causes

Secretary Rezaei's declaration of a restricted zone is not an impromptu remark. It is more akin to an outcome that was already conceived during the negotiation process for the Islamabad Memorandum [2]. SIPRI has taken issue with the wording of a specific clause in the memorandum. It points to the possibility that the United States may have allowed Iran, as part of a final peace treaty, the authority to permanently restrict freedom of navigation in the Strait of Hormuz [2]. If this interpretation is correct, the current measure is not a policy shift taken by Iran after the memorandum's expiration. Rather, it is the materialization of an agreed-upon structure embedded within the memorandum itself [2].

Iran's calculation is twofold. On one hand, it is largely a countermeasure to intensified U.S. economic sanctions. The timing coincides with the U.S. sanctioning of over 60 entities under 'Operation Economic Outcast' [6]. On the other hand, it is an asymmetric strategy to offset its military inferiority. Iran's naval power cannot directly confront the U.S. Navy. Instead, it has opted to use transit through the strait as leverage [3][9].

Internally, economic difficulties are pressuring policy decisions. At the same time, the Iranian government raised gasoline prices for high-consumption users [1][17]. Under a three-tiered quota system, the price doubles for consumption beyond the first 60 liters, and increases again in the third tier [17]. This signals that the capacity to absorb the financial pressure from sanctions domestically is being exhausted. It is a pattern of concurrent external hardline measures and internal austerity [1][17].

2. Structural Context

Political Structure

The Islamabad Memorandum was a fragile agreement from the outset [2][9]. Although President Trump declared “Ships of the world, turn on your engines” immediately after signing [9], behind this statement lay ambiguity in the clauses concerning freedom of navigation [2]. When the memorandum expired on August 17, Iran immediately shifted to an aggressive stance [6][9]. This implies that the memorandum was merely a temporary expedient for a ceasefire, not a fundamental agreement on the navigational order.

Iran's internal power structure is also a factor. Secretary Rezaei spoke on behalf of the Supreme National Security Council [1][14]. This is a position from which he can exercise real enforcement power over both the IRGC Navy and the regular navy. The case of the Persian Gulf Strait Authority blacklisting 45 vessels, including the tanker owned by Sinokor, demonstrates that this statement is not mere rhetoric [3]. It means the institution has actual enforcement capability [3].

Economic Structure

Before the war, the Strait of Hormuz was a route for about one-fifth of the world's crude oil and LNG supply [8][12][15]. According to PIIE data, an average of 88 merchant ships passed through the strait daily [6]. Since the war began, this flow has virtually ceased [8][12]. Nevertheless, it is paradoxical that oil prices have not soared to catastrophic levels. Foreign Affairs described this by saying, “The world should be suffering a much more severe energy crisis, but it is not” [8]. This implies that alternative supplies from Saudi Arabia and the UAE, along with China's continued low-cost imports of Iranian crude, have served as a buffer [6].

The China factor is structurally key. China accounts for over 80% of Iran's crude oil imports [6]. Even as the U.S. announced new sanctions, it opted for selective enforcement, exempting major Chinese banks from the list of targets [3][6]. This reveals a structural limitation: the effectiveness of U.S. sanctions themselves depends on China's cooperation. If Iran declares a restricted zone but shipments to China continue to flow, the measure's real impact is likely to be concentrated on shipping companies and cargo owners from countries other than China.

Security Structure

Military clashes are showing a recurring pattern at sea. On September 5, U.S. Central Command struck three Iranian vessels, including an oil tanker near Kharg Island [12]. Prior to that, Iran's IRGC claimed to have launched a ballistic missile attack on two U.S. warships [12][14]. U.S. Navy Admiral Brad Cooper warned, “If the IRGC shoots at two of our ships, we will neutralize three of theirs at a higher economic cost” [16]. Iran has threatened a “faster and more intense response” [13][17]. Both sides are caught in a structure of repeatedly threatening escalation beyond proportional responses.

The IMO assessed the situation, stating, “The continued instability in the Middle East is creating a volatile situation for global shipping” [11]. The safety of over 20,000 seafarers stranded on vessels unable to exit the strait is also a concern [11].

3. Historical Precedents and Comparative Cases

This is not the first time threats of a blockade have surrounded the Strait of Hormuz. Iran has previously raised the prospect of a strait blockade during past periods of U.S. sanctions. However, the current situation is qualitatively different from the past. It has moved beyond mere threats to the implementation stage, involving actual blacklisting and the operation of a transit system [3][9]. This is supported by the fact that as of August 11, all 11 transiting vessels used Iran's unilateral transit system [9]. Despite its lack of a legal basis, the system has become the de facto standard route [3][9].

This follows a similar trajectory to the transit control methods established by Houthi rebels in the Red Sea and the Bab el-Mandeb Strait. In Yemen, clashes between Saudi-backed government forces and Iran-backed Houthi rebels have killed more than 140 people [13]. The Houthi rebels have exercised a de facto veto over Red Sea shipping lanes, and Iran's plan for a restricted zone in Hormuz can be seen as aiming for a similar form of 'de facto control.' It is a method whereby a coastal state, backed by military force, imposes its own transit norms in an international strait where freedom of navigation is guaranteed under international law.

Adjusting domestic energy prices during a period of economic sanctions is also not without precedent. In past sanctions periods, Iran has shifted the financial burden to consumers through rationing and differential pricing systems. The recent gasoline price hike is an extension of this practice [1][17].

4. Key Variables Shaping Future Developments

The first variable is the actual boundary and enforcement method of the restricted zone. Secretary Rezaei only stated that it “will start from the U.S. Navy's blockade line and include parts of the Persian Gulf” [1][4][16]. Specific coordinates and means of enforcement have not yet been disclosed. The scale of the repercussions will depend on whether this zone is an extension of the existing transit system or signifies a new line of military confrontation.

The second variable is the level of the U.S. response. Admiral Cooper’s remark about “neutralizing three ships” suggests a willingness to escalate beyond a proportional response [16]. If President Trump repeatedly makes statements threatening the Omani mediation channel, this sole remaining avenue for negotiations could collapse.

The third variable is China’s stance. If China, which accounts for over 80% of Iranian crude oil imports, continues its transits after the restricted area is declared, Iran’s measure could effectively become a form of selective control targeting only U.S. and allied shipping companies [6].

The fourth variable is the question of legal status, as pointed out by SIPRI [2]. The future official U.S. response will reveal whether the ambiguous provisions of the Islamabad Memorandum actually signify U.S. acquiescence or are merely Iran's unilateral interpretation. If the United States does not explicitly reject this measure, there is a risk that the principle of freedom of navigation itself could be invoked as a precedent in other strait disputes beyond the Gulf region [2].