Shipping through the Strait of Hormuz — the narrow waterway between Iran and Oman that normally carries roughly one-fifth of the world's oil and liquefied natural gas — has dropped sharply after Iran's Islamic Revolutionary Guard Corps declared the passage closed again, casting a shadow over fragile diplomatic efforts between Tehran and Washington.
Maritime intelligence firm Windward recorded just 12 vessel transits on Sunday, down from 35 the previous day. Five of eight ships entering the strait had switched off their Automatic Identification System (AIS) transponders — a practice vessels use to avoid detection. Windward described the traffic profile as "dark, sanctioned, Iranian-linked, resembling the late-blockade baseline more than a functioning open strait." The IRGC cited deadly Israeli strikes on Lebanon as a breach of the agreement Tehran signed with Washington, warning ships not to approach or risk their safety. US Central Command contested the closure claim, reporting 55 merchant ships transited on Saturday carrying more than 17 million barrels of oil. Supply chain expert Behrouz Bakhtiari of McMaster University in Canada suggested both figures could reflect different realities: vessels hugging the Omani shoreline with AIS off may be invisible to commercial trackers but counted by US military surveillance, while each side has its own incentive to frame the situation favourably.
The dispute over the strait erupted just as US and Iranian negotiators convened in Switzerland — reportedly including talks with US Vice President JD Vance — for what are being described as make-or-break sessions. The two sides had signed a memorandum of understanding on Wednesday, launching a 60-day negotiating window aimed at converting a ceasefire extension into a permanent peace framework and addressing longer-term issues including Iran's nuclear programme. Traffic through the strait had been recovering since that agreement, with 25 transits recorded on Thursday, the highest figure since mid-April. After Sunday's talks, Iranian Foreign Ministry spokesman Esmaeil Baghaei said the two sides had discussed safe passage and established "a mechanism, which is important," without elaborating further.
Despite the renewed tensions, financial markets appeared cautiously optimistic. Brent crude fell around 0.9 percent in Asian trading to just under $80 a barrel, and major stock indices in Tokyo, Seoul, and Taipei posted gains of between 1.5 and 2.6 percent. The muted market reaction suggests investors are betting the diplomatic channel will hold, even as the situation remains volatile. Analysts and former officials, including ex-US Ambassador Ryan Crocker, have stressed the need for strategic patience, warning that the path to a durable settlement will be long and vulnerable to exactly the kind of third-party escalation now unfolding in Lebanon.