The proposed Hormuz agreement is unenforceable.

A proposed deal between Iran and Oman that would give Tehran control over ships entering the Persian Gulf through the Strait of Hormuz is difficult to implement due to U.S. sanctions and restrictive insurance company rules on any payments, four maritime industry sources told Reuters.

Until the US and Israeli air strikes in late February that led to the outbreak of war in Iran, this narrow sea passage between the Persian Gulf and the Indian Ocean was a major shipping route for about a fifth of the world's oil supplies and other important goods. The passage was open to all ships and no tolls were charged.

The issue of control over the strait has proven to be the biggest obstacle in efforts to end the conflict.

Under the latest proposal, Tehran would have the right to intervene if it deems it necessary when it comes to ships entering the Gulf, while ships leaving would use the waterway between Iran and Oman, and would receive permission to exit from Omani authorities after informing Iran, a senior Iranian official told Reuters this week.

"The ability of merchant ships to navigate international waterways safely, predictably and without unnecessary hindrance is essential for the stability of supply chains, economic stability and energy security," said an open letter from the world's leading maritime associations published this week.

The introduction of mandatory fees for passage through the strait or the provision of services would effectively constitute a toll, according to a letter sent to the United Nations agency in charge of maritime transport.

"This would set a precedent that could undermine the internationally recognized legal framework governing navigation through straits intended for international navigation and transit," the letter states.

The system of separating shipping routes in both directions was adopted by the United Nations International Maritime Organization back in 1968, with the consent of the countries in the region. This established the current system of shipping corridors that pass through the territorial waters of Iran and Oman.

According to a senior Iranian official, Iran is demanding a fee of five to seven percent of the value of cargo from ships using the Strait of Hormuz. Oman is considering a fee of about three percent, while Washington is pushing for the passage to remain completely free.

The United Nations International Maritime Organization said it could not comment on the allegations about these proposals.

In July, the organization's governing body said that states bordering the strait must guarantee "non-discriminatory and unimpeded right of transit passage to all ships" through the existing system of shipping routes, and that passage must remain free of all fees and charges.

For shipping companies and oil traders, any introduction of fees would pose a serious problem, as the United States has imposed sanctions on the Persian Gulf Strait Authority, a body Iran established in May to manage shipping through the Strait of Hormuz.

The US Treasury Department has banned American citizens and companies from using Iranian government services related to "safe passage guarantees."

Any payment could lead to an asset freeze, according to Reuters shipping industry sources who declined to be named due to the sensitivity of the matter.

An additional problem is the decision of the London Insurance Market Association (Lloyd's Market Association – LMA), which in late July introduced a new provision for insurers specializing in war risks. According to this provision, insurance coverage automatically ceases to be valid if a ship pays a transit fee, toll or any other charge for passing through the Strait of Hormuz.

Ships passing through this strait already have to pay an additional premium for war risk insurance, to be covered in the event of damage during navigation.

“Under this provision, insurers are not obliged to reimburse such payments, and if compensation has already been paid, all their obligations to the ship to which it relates cease,” the LMA said in July.

One insurance industry source said shipping companies were caught in a kind of trap, as LMA rules prohibit insurers from covering shipowners who pay compensation, while Iran is simultaneously seeking to impose mandatory tolls for passage through the strait. NB