Strait of Hormuz reopening proposal signals major shift in global energy security
A proposed US–Iran ceasefire draft that includes reopening the Strait of Hormuz and easing sanctions could reshape global energy flows, stabilise oil.
Malata-flagged oil tanker Agios Fanourios I sails through the Strait of Hormuz. (Photo: Mohammed Aty/REUTERS via DW)
The reopening of the Strait of Hormuz features prominently in a 14-point draft ceasefire agreement between the United States and Iran, signalling a potential shift in global energy and security dynamics if implemented.
The draft memorandum outlines an immediate end to hostilities between the two long-standing rivals, alongside phased measures to restore maritime and economic activity in one of the world’s most strategic energy chokepoints.
Under the proposal, shipping traffic through the Strait of Hormuz would be restored to pre-conflict levels within 30 days of signing. The move is expected to ease supply risks and reduce the geopolitical risk premium that has weighed heavily on global oil prices.
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The proposed accord is expected to be formally signed in Switzerland on Friday, June 19, according to Pakistan, which has been mediating negotiations between Washington and Tehran.
The Strait of Hormuz, through which roughly 20 per cent of the world’s oil and liquefied natural gas shipments normally pass, has been effectively closed since shortly after US and Israeli airstrikes on Iran on February 28.
Following the conflict, Iran had threatened to target vessels using the waterway, raising fears of prolonged disruption to global energy flows and pushing oil prices sharply higher as markets reacted to escalating tensions in the Middle East.
Before the conflict began, Brent crude was trading at around $70 (Sh9,071) per barrel. Prices later surged to nearly $120 (Sh15,550) at the height of the crisis as traders priced in potential supply shocks linked to instability around the Gulf shipping route.
“Immediately upon the signing of this Memorandum of Understanding, the United States will lift the naval blockade and prevent any interference or obstruction against the Islamic Republic of Iran, and restore traffic within a maximum of 30 days to its full capacity,” the draft states.
If confirmed, the Strait’s reopening would mark a major easing of global supply fears, given its role as a key transit corridor for energy exports from the Gulf to major consuming markets in Asia and Europe.
Beyond maritime provisions, the draft also includes sanctions relief for Iran, permission to resume oil and petrochemical exports, and potential access to a large-scale development financing package tied to future compliance steps.
The agreement further commits both sides to avoid hostile action and enter formal negotiations toward a final deal within 60 days, though key technical issues, including aspects of Iran’s nuclear programme, remain unresolved in the draft text.
Analysts say that while broader geopolitical uncertainties persist, any reopening of Hormuz would be the most immediate and significant factor influencing global oil sentiment, potentially easing prices and stabilising supply expectations in the short term.
The draft also outlines broader structural elements shaping the proposed diplomatic framework. It extends the ceasefire provisions beyond direct US–Iran hostilities to allied and partner forces involved in the wider regional theatre, effectively folding multiple active conflict zones into a single cessation-of-hostilities arrangement.
It further introduces a formal obligation for both sides to engage in sustained negotiations toward a comprehensive settlement within a 60-day window, with extensions allowed only by mutual consent, underscoring the time-bound nature of the process.
In parallel, implementation progress is linked to a staged transition into deeper talks, making early compliance on initial measures a prerequisite for addressing remaining political and security disputes.
Another key feature is the proposal to elevate the final agreement into an internationally binding instrument through endorsement by the United Nations Security Council, signalling an effort to anchor the deal within a multilateral legal framework rather than a purely bilateral arrangement.
Taken together, these provisions point to an attempt to create not just a ceasefire mechanism, but a sequenced diplomatic pathway designed to secure early compliance, broaden regional containment of conflict dynamics, and internationalise enforcement through the UN system.