Iran said Wednesday it is in the “final stage” of drafting an agreement with Oman over the Strait of Hormuz, and US President Trump said an announcement could come within days, according to the Associated Press via NBC News. If finalised, the deal would mark the most credible step yet toward restoring normal traffic through a waterway that carries roughly a fifth of the world’s oil and gas supply — and whose disruption has been a defining driver of energy prices and inflation risk through much of 2026.

What the emerging deal actually proposes

According to regional officials briefed on the talks and cited by the Associated Press, the draft arrangement would create separate inbound and outbound shipping lanes: vessels would enter the Persian Gulf through an Iran-controlled route and exit through a route controlled by Oman. Iranian and Omani negotiators have reportedly finalised the draft and are now awaiting sign-off from Iran’s Supreme Leader.

US officials have confirmed active involvement in the process. Secretary of State Marco Rubio said Tuesday that progress had been made though no final agreement was yet in place, while Treasury Secretary Scott Bessent suggested a deal could land within a day or two, based on reporting from Al Jazeera. Iran’s foreign ministry separately described the talks with Oman as “positive.”

The sticking point that could still unravel it

The single biggest obstacle is reciprocity. Regional officials say the emerging agreement is contingent on the United States lifting its blockade of Iranian ports — a condition the Trump administration has previously resisted, having ruled out any arrangement seen as cementing Iranian control over the strait, according to NBC News. Trump himself has kept pressure on Tehran, warning Tuesday night that Iran would “get hit really hard” if it backs out of a deal again, per The Washington Times.

This would not be the first time talks have collapsed close to the finish line. The current negotiation track is explicitly tied to a broader US-Iran agreement reached in June that aimed to end hostilities and reopen the strait but ultimately fell apart, officials told the AP.

Why markets are already moving on the news

Even short of a signed deal, the mere prospect of resolution has been enough to move markets. Oil prices fell below $80 a barrel on optimism around the talks, and US equities posted a historic session Tuesday — the Dow Jones Industrial Average surged more than 900 points to close above 54,000 for the first time, with the S&P 500 also setting a fresh record, according to The Washington Times.

The scale of the disruption being priced out is significant. Before the conflict, an average of 20 million barrels a day moved through Hormuz, accounting for roughly a fifth of global oil supply, according to CNN. Commercial transit has continued at a fraction of that — an estimated 3 to 5 million barrels a day via the limited Omani traffic lane, per shipping analytics firm Marisks, cited in the same CNN report. Saudi Aramco chief executive Amin Nasser estimated global markets are currently losing more than 100 million barrels a week in constrained throughput, and warned that even an immediate reopening would take up to 18 months to fully replenish depleted inventories.

What comes next

A finalised deal would still function as an interim fix rather than a permanent settlement — regional officials briefed on the negotiations described it as a temporary solution designed to de-escalate the immediate standoff and open the door to renewed US-Iran talks on Tehran’s nuclear programme, per NBC News. For markets, that means the reopening — if it happens — is likely to reduce risk premiums without immediately restoring pre-conflict supply volumes, given the months-long replenishment timeline Aramco’s Nasser flagged.

Key takeaways

• Iran and Oman describe a draft deal on Strait of Hormuz shipping lanes as in its “final stage,” pending approval from Iran’s Supreme Leader.
• The proposed structure: ships enter the Gulf via an Iran-controlled lane, exit via an Oman-controlled lane.
• The deal is reportedly contingent on the US lifting its blockade of Iranian ports — the main remaining sticking point.
• Oil fell below $80/barrel and US stocks hit record highs Tuesday on deal optimism.
• Even with a deal, full supply restoration could take up to 18 months, according to Saudi Aramco’s CEO.

FAQs

Has the Strait of Hormuz deal been finalised? As of August 5, 2026, the deal was described as being in its “final stage,” awaiting sign-off from Iran’s Supreme Leader — not yet formally announced.

What would the deal change for shipping? It would establish separate inbound (Iran-controlled) and outbound (Oman-controlled) lanes to allow commercial vessels safe passage through the strait.

Why does the Strait of Hormuz matter for oil prices? Roughly one-fifth of global oil and gas supply historically transited the strait; its disruption has constrained an estimated 100+ million barrels a week from reaching markets, per Saudi Aramco.

Russia’s oil and gas revenue fell 22% in the first eleven months of 2025, and the pressure has only intensified since the United States imposed primary sanctions on Rosneft and Lukoil in October 2025, according to the Atlantic Council’s Russia Sanctions Database. Moscow is now rerouting exports through smaller companies to work around the sanctions, even as its military-industrial base continues expanding — Russia claims to have localized nearly 90% of drone manufacturing.

The discount on Russian crude is widening

The mechanism behind the revenue drop is the widening discount Russian oil must offer to find buyers. Urals crude traded at roughly a 10% discount to global benchmarks through much of 2024 as sanctions normalized, but that discount exceeded 15% in November 2025 after the Rosneft and Lukoil sanctions were announced, and jumped further to around 30% by year-end, according to analysis from the New Eurasian Strategies Centre. Sanctions have not meaningfully reduced the volume of oil Russia exports — production in 2025 was only 2.5% below 2021 levels — but they have reshaped how, and at what price, that oil moves.

How Moscow is compensating

Faced with declining oil revenue, the Kremlin has raised taxes across the board: increasing the income tax burden, lifting VAT from 20% to 22%, raising the profit tax from 20% to 25%, and pushing the profit tax on oil transport to 40%, according to the Atlantic Council database. Russia has also issued $2.8 billion in yuan-denominated bonds to raise financing, while corporate debt has surged 71% since 2022 as businesses absorb the fiscal strain.

Despite the tax increases, Russia’s total federal budget revenue rose only 1.6% year-on-year in ruble terms during 2025, reaching 37.3 trillion rubles ($446 billion), according to the Oxford Institute for Energy Studies. A stronger ruble through the year meant the dollar-value increase was more pronounced than the ruble figures suggest, but that currency strength itself became a fiscal headwind — the same Oxford analysis estimates rouble appreciation alone cost Russia’s oil revenue 0.6% of GDP.

What’s changed since the Rosneft-Lukoil sanctions

The picture has deteriorated further into 2026. Russia’s oil and gas cash flows dwindled to their lowest levels in years by February 2026, pushing Putin to borrow more heavily from domestic banks and raise taxes further just to keep state finances stable, according to Euronews. Analysis from RE-Russia projects that if sanctions pressure holds and oil prices continue falling, Russia’s 2026 oil and gas revenues could see a decline comparable to or exceeding the current downturn, with Urals prices potentially settling in the $40-45 per barrel range, per RE-Russia’s assessment.

The enforcement gap that keeps the war funded

Even so, sanctions remain incomplete. Since the 2022 invasion, EU countries have paid an estimated €220 billion for Russian coal, oil, and gas — roughly 20% of Russia’s total energy earnings during that period — even as the bloc has simultaneously imposed restrictions, according to the International Centre for Defence and Security. That analysis argues Western sanctions enforcement, not sanctions design, remains the binding constraint on their effectiveness.

Two contradictory forces are shaping the 2026 oil market simultaneously: a structural glut large enough to keep prices depressed for years, and a live geopolitical risk premium large enough to send prices toward levels not seen in over a decade. Both are true at once, and understanding why matters for anyone pricing energy, currency, or emerging-market risk this year.

The Oversupply Case

The consensus view among major forecasters is bearish. The IEA has projected a 2026 surplus of up to 4.09 million barrels per day, later revising it slightly down to 3.84 million barrels per day as sanctions on Russian and Venezuelan supply offset some of the glut, according to Forex.com’s 2026 outlook. Goldman Sachs has forecast Brent averaging $56 per barrel and WTI $52 in 2026, driven by long-delayed pandemic-era projects coming online in clusters alongside OPEC+’s gradual unwinding of production cuts, per coverage from iTiger. The bank has flagged Brent could fall into the $40 range if non-OPEC supply proves more resilient than expected or a recession hits in 2026-2027.

EBC Financial Group’s analysis similarly expects Brent to average $58-60, with the IMF projecting global growth of 3.3% for 2026 — a supportive but not booming demand backdrop. Crucially, forecasters diverge sharply on demand growth itself: the IEA projects roughly 930,000 barrels per day of additional 2026 demand, while OPEC is far more bullish at 1.4 million barrels per day — a gap that alone could determine whether the market tightens faster than consensus expects.

The Geopolitical Premium

Layered on top of that oversupply is acute conflict risk. The 2026 U.S.-Israeli military conflict with Iran and the effective closure of the Strait of Hormuz triggered what one analysis calls a “historic geopolitical supply shock” against the oversupply backdrop, according to Just2Trade’s market review. The IMF has characterized an “adverse scenario” of 2.5% global growth and 5.4% inflation as a live operating risk, warning that prolonged conflict with oil near $125 a barrel could de-anchor global inflation expectations entirely. Notably, oil and equity markets have diverged during the crisis — Brent fell sharply during a late-May ceasefire period even as equities rallied, illustrating how regime-dependent the correlation between crude and financial markets has become.

Setting Up the Next Shortage

Perhaps the most underreported angle is the setup for what comes after 2026. Lower prices are already deferring investment, particularly in U.S. shale — the EIA forecasts flat 2026 output with potential declines if prices stay below $60, according to Fort Worth Inc.’s analysis of Saxo Bank data. Goldman Sachs projects prices could rebound toward $80/$76 (Brent/WTI) by end-2028 specifically because low 2025-2026 prices will curb non-OPEC supply growth while minimal new long-cycle projects come online post-2026, following roughly 15 years of underinvestment.

Who This Hits Hardest

The oversupply-plus-risk-premium combination lands unevenly. Producers with high fiscal breakeven prices and limited buffers — Russia chief among them, whose Q1 2026 oil and gas revenue collapsed 45% year-on-year — are exposed on the downside even as they occasionally benefit from conflict-driven price spikes. Gulf producers, by contrast, are using current elevated-but-volatile pricing to accelerate diversification of their sovereign wealth into non-oil assets, a hedge against exactly this kind of structural oversupply persisting into the 2030s.