The New York Times and other outlets are reporting today that Oman is signaling willingness to accept “fees” or other restrictions on shipping through the Strait of Hormuz — in line with Iran’s preferences.
On its own, this is not surprising. Oman has long been caught in the middle of U.S.–Iran tensions and tends to be pragmatic. Agreeing to Iran’s terms reduces the probability that Oman will be targeted by Iranian missiles or drones. For Oman, that calculation makes sense.
Framed in context, however, this development is emblematic of a broader U.S. foreign policy and strategic failure on Iran.
Iran remains in effective control of the Strait of Hormuz. By extension, Iran exerts leverage over a large swath of the global economy and Middle Eastern energy flows. While the U.S. has pursued a media campaign that often reads as intellectually dishonest, the reality on the ground has not changed.
Oman and Iran are separated by less than 25 miles (40 km) at the narrowest point of the Strait. Muscat is roughly 300–350 miles (480–560 km) from the southern Iranian coast — well within Iranian missile range. Oman’s historical alignment with the U.S. has put it in an uncomfortable position, and the U.S.-backed push for joint management talks has left Oman negotiating directly with Iran on terms favorable to Tehran.
This is not an isolated incident. It reflects a pattern of U.S. diplomatic ineffectiveness. Recall Trump’s May threat to “blow up” Oman if it acquiesced to fees or tolls. Framed differently, the U.S. was asking Oman to hold the line against Iran while ignoring that Oman faces immediate consequences from Tehran. This type of coercive diplomacy — threatening allies who are caught between two stronger powers — signals weakness rather than strength.
The same pattern appears elsewhere. Trump’s attempt to pressure Gulf nations into signing the Abraham Accords (something Saudi Arabia has long opposed) was met with silence and disbelief. Kushner reportedly tried to repair the damage, but the effort went nowhere. GCC nations are increasingly consulting China and other non-U.S. players, seeking side deals that bypass Washington.
These examples highlight a deeper problem: U.S. foreign policy has become ineffective and unprofessional. Threats and demands born of desperation are pushing allies toward accommodation with adversaries who can offer more immediate protection or pragmatism. When the U.S. lacks the willingness (or ability) to back its rhetoric with decisive action, allies notice — and distance themselves.
The cost is clear. Iran has little incentive to make meaningful concessions. The Foreign Ministry’s recent comments on managing the Strait with (or without) Oman show Tehran is not interested in a deal that relinquishes control. The MOU was always a tactical pause; the hardliners never bought in.
Markets have remained anchored to optimistic U.S. rhetoric and the belief that “it always works out.” That narrative is increasingly detached from reality. The U.S. has lost control of the negotiating process, allied cohesion, and the ability to dictate outcomes on the Strait. With time compounding the pain of constrained shipping and depleted buffers, the world may eventually accept (or ask for) Iranian management (and fees) if it normalizes energy flows.
When markets finally internalize this — the loss of leverage, the broken diplomatic track, and the lack of good options — the reaction is unlikely to be bullish.
The U.S. urgently needs a more coherent strategy. For the world’s sake — and its own.
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