Iran proposing joint Omani-Iranian companies is pure rent-seeking

By Klaus Berger · Reporting from Frankfurt · August 4, 2026

The perennial struggle over who controls the passage through vital chokepoints is not a geopolitical problem; it is a failure of institutional design.

The Illusion of Sovereignty Over Global Arteries

The perennial struggle over who controls the passage through vital chokepoints is not a geopolitical problem; it is a failure of institutional design. When Iran demands inbound control and outbound oversight of the Strait of Hormuz, what we are witnessing is nothing less than an attempt to privatize global commerce—a profoundly dangerous act that ignores the fundamental principles of international law and market stability. The rhetoric from Washington, whether through Donald Trump’s pronouncements of "last chance" or Scott Bessent's assurances that a deal is "in sight," only serves to mask the underlying instability. Tehran, meanwhile, asserts full sovereignty while simultaneously proposing joint Omani-Iranian companies for maritime services, as detailed by DW and confirmed by Al Jazeera. This isn't governance; it is rent-seeking dressed up in diplomatic language.

The Siren Song of Temporary Corridors

The core mechanism at play here is the temptation to replace established international rules with bespoke, ad hoc arrangements—a policy nightmare that history has repeatedly punished. We see this pattern mirrored acutely by the Suez Crisis of 1956. In both instances, a major power attempts to unilaterally dictate passage rights through an essential waterway, claiming sovereign necessity over global access. The objective is always the same: to use physical control as leverage against international economic needs.

The proposed "circular route" involving northern Iranian waters and southern Omani transit, relayed by Esmail Baghaei (as reported by DW), merely substitutes one temporary arrangement for another. It suggests that stability can be achieved through a series of bilateral memoranda rather than robust, multilateral governance structures—a fatal error in logic.

When Rules Fail, History Repeats the Disaster

The Suez Crisis teaches us that when great powers or regional actors believe they can impose their will on an artery like the Canal or Hormuz, the resulting instability is not merely a temporary hiccup; it threatens systemic collapse. The attempt to manage passage rights through force or localized agreements—be they joint companies or designated corridors—always fails because the underlying global need (the free flow of energy and goods) overwhelms any local claim.

The current drama confirms that the incentive structure points away from cooperation and toward maximalist control. Iran’s insistence on managing the strait, coupled with its denial of ongoing talks with the US (as reported by The Guardian), is a calculated effort to raise the cost of doing business globally. This behavior fundamentally undermines the predictability required for modern capital flows.

The only stable outcome for global trade—the kind that supports predictable fiscal planning and low risk premiums—is the strict adherence to international law guaranteeing freedom of passage, regardless of which national flag flies over the adjacent coastlines. The moment we allow regional powers to treat vital choke points as negotiable assets rather than shared commons, we are structurally undermining the entire architecture of global commerce.

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WTI crude oil price. Source: Federal Reserve Economic Data (FRED).

Iran proposing joint Omani-Iranian companies is pure rent-seeking

The Illusion of Sovereignty Over Global Arteries

The Siren Song of Temporary Corridors

When Rules Fail, History Repeats the Disaster

Sources