Iran has exempted ships from India, China, Iraq and Qatar from its restrictions on passage through the Strait of Hormuz, a senior Iranian lawmaker has said, raising questions over how the arrangement will work alongside the US naval blockade.
Amir Hayat Moqaddam, deputy chairman of Iran’s parliamentary National Security and Foreign Policy Committee, said vessels from the four countries could pass freely and that US forces were not intercepting them.
“Ships from these countries pass freely, and the Americans do not intercept them either,” he told the Iranian Students’ News Agency.
Why Iran is allowing the ships through the Strait of Hormuz
Mr Hayat Moqaddam said Iran would receive medicines from India and political backing from China in return for allowing the exemptions. Qatar has already been providing diplomatic support while mediating efforts to end the conflict.
Iran is also expected to collect transit fees from Indian and Chinese vessels, while Qatari ships will pass without charge. It was not clear whether Iraqi vessels would be required to pay a toll.
Rouzbeh Parsi, an Iran analyst and affiliated researcher at Lund University’s Department of History and Human Rights Studies, said bartering and reciprocal trade arrangements were familiar to a country that had been under sanctions for many years.
“The big question is if it works and, if yes, to what extent?” he said, adding that the arrangement appeared aimed at creating openings in the blockade and securing essential goods and services.
Nader Hashemi, an associate professor of Middle East politics at Georgetown University, said Iran was most likely charging a transit fee or taking a percentage of the cargo’s value in exchange for safe passage.
Wolfgang Pusztai, a security and defence analyst and Austria’s former defence attaché to Libya, described the policy as a potentially significant source of revenue. China is the largest buyer of Iranian crude, accounting for nearly 90 per cent of the country’s oil exports, he said.
Including Qatar and India could also help Tehran challenge acceptance of Washington’s approach to the conflict, Mr Pusztai said, particularly because Qatar is not being charged a toll.
China, India and Gulf states depend on the waterway
The four countries are heavily reliant on the Strait of Hormuz for trade. Of the 10.23 million barrels a day of Gulf crude that passed through the strait in October, about 42 per cent went to China and 13 per cent to India, according to Muyu Xu, a senior crude oil analyst at Kpler.
India has been particularly affected by the loss of Gulf oil, while it is also a major producer of the pharmaceuticals Iran cannot manufacture itself, Mr Parsi said.
Qatar sent no liquefied natural gas through the strait in August but moved 1.8 million tonnes in October. Its crude shipments fell from 517,000 barrels a day to 193,000 over the same period, while Iraq’s rose from 1.69 million to 2.65 million barrels a day.
Up to two million barrels a day of Middle Eastern crude could not be traced, meaning the actual flows from Qatar and Iraq may be higher, Ms Xu said.
China is considered the country most willing to challenge US interests, but Beijing will have to decide whether the potential benefits outweigh the political cost, Mr Parsi said.
India and Qatar also have relationships with Washington to maintain, while both have felt let down by Donald Trump, he added. Qatar’s proximity to Iran makes maintaining ties with Tehran particularly important.
Will the exemptions overcome the US blockade?
Iran effectively closed the strait at the start of the war with the US and Israel on February 28. The United States reimposed a naval blockade on Iran’s southern ports in July.
US Central Command has said the blockade covers all vessels entering or leaving Iran’s coastal areas or ports, while ships avoiding Iranian ports are not affected. Humanitarian shipments, including food and essential medical supplies, may pass after inspection.
It remains uncertain whether the Iranian exemptions apply only to vessels trading with other Gulf states or also to Chinese and Indian ships travelling to and from Iran.
It is also unclear whether the designation refers to a vessel’s flag, its owner, its operator or another connection to one of the four countries.
Mr Pusztai said the move could make the US blockade more difficult to sustain if Washington accepted Iran’s interpretation. It could also affect other Gulf states, including Saudi Arabia, if the exemptions were not limited to specific routes.
Iran has made an end to the blockade one of its demands before agreeing to wider peace talks with the US, including discussions over its nuclear programme. Qatar-mediated negotiations are focused on an Iranian proposal to reopen the strait if Washington meets seven conditions, including lifting sanctions.
Iran began allowing some vessels from countries it considers friendly to pass within weeks of the war starting. Its military command said in April that Iraq, described as a “brotherly” country, was exempt.
Mr Pusztai said the Iraqi exemption was probably intended to support the economic recovery of Iran’s western neighbour, which is also a Shia-majority country.
Limited immediate impact on oil markets
The exemptions have so far made little difference to oil markets, according to Chris Beauchamp, chief market analyst at IG Group.
“Markets are back to pricing in a peace deal, but if conflict flares up at full tilt, then Iranian commanders may not have time to distinguish their targets,” he said.
The arrangement has not guaranteed safe passage. On October 30, the Qatari liquefied natural gas carrier Al Mayeda was struck by unidentified objects in the Gulf, according to its owner, Qatar Gas Transport Company.
More than 120 commercial ships have been hit in the region since the war began, with October recorded as the worst month.
