The Hormuz Standoff: Why a Choked Waterway Is Shaking Up Energy Prices
Iran said on August 9, 2026 that an agreement with Oman over the Strait of Hormuz was in its "final stages," but insisted the United States "must act" before ships can pass through again. The Strait of Hormuz is a narrow channel between Iran and Oman through which about 20% of the world's oil and LNG (liquefied natural gas, gas cooled into liquid form for shipping) normally flows. Iran has largely blocked it since February 28, 2026. EU natural gas prices rose to €57.45 per megawatt-hour on August 10, up 3.43% from the day before, as uncertainty over gas shipments from the Persian Gulf intensified. Trading Economics
The Strait has been largely blocked by Iran for over five months in what is now called the 2026 Strait of Hormuz crisis. In mid-July, as fighting between the US and Iran escalated across the Gulf, no oil tankers or LNG carriers passed through the Strait for at least two straight days. Reuters
Talks have swung between hope and deadlock. On August 5, US President Donald Trump said a deal could come "as early as Wednesday," and Axios reported the US aimed to announce an interim agreement with Iran and Oman that day. By August 6, Iran said a deal was close, with reports suggesting Tehran would have control over the waterway. Oil prices jumped more than $3 a barrel that same day as Iran's parliament reviewed a bill to ban US and Israeli vessels from the Strait. Reuters
By August 8, Iran cooled expectations, saying a deal was close but "will not open the waterway by itself." Oman, which is mediating the talks, reported positive negotiations and condemned ship attacks. The same day, it emerged that Iran had issued a list of demands, including that the US pay compensation for its "violations" before reopening. New York Times
On August 9, Iran said it was close to agreeing shipping lanes with Oman but again said the US would have to meet certain conditions. The message has been two-track throughout: the Oman deal is in its "final stages," while Washington must separately act. Those demands complicate what all sides had called an interim agreement. Reuters
Trump later posted that the Strait would reopen without a tolling system run by Iran, which calmed markets and helped push European and Asian LNG prices lower as reopening hopes grew. Natural Gas Intelligence
Those price drops were partly reversed by August 10's rise in EU gas prices, showing the back-and-forth that markets have dealt with for months. European gas prices were relatively flat as recently as mid-July, when the outlook for reopening was unclear. Investing.com
Iranian attacks on ships in the Strait have been paired with increased strikes by the Houthis, Iran's allies based in Yemen. That adds a second layer of danger for any tanker traffic, even if a political agreement is reached. Reuters
The broader pattern here is worth understanding if you are watching energy prices or shipping costs. Every headline suggesting the crisis is almost over has been followed by a new condition from Tehran that pushes the timeline back. The Oman deal may be in its "final stages," but Iran has been clear that it is only one piece of the puzzle, not the whole solution. The US compensation demand, the parliamentary bill targeting US and Israeli vessels, and the continued Houthi attacks each separately could block the Strait from reopening. The market is not just betting on whether an agreement gets signed; it is betting on whether an agreement leads to ships actually moving freely again. Those are two very different things.
For European and Asian gas buyers, that gap matters a great deal. Persian Gulf LNG is a significant portion of global supply, and the August 10 price rise suggests the market is adjusting to the difference between diplomatic progress and ships sailing again. Oil prices have reacted similarly — the August 6 jump of more than $3 a barrel was caused not by talks falling apart but by a new law being considered in Tehran. The crisis has built a lasting extra cost into energy prices that will not go away until tankers are moving through the Strait with real security guarantees, not just a signed piece of paper.
