Iran exempts India, China, Iraq and Qatar ships from Hormuz restrictions

Iran has exempted ships from India, China, Iraq and Qatar from its Strait of Hormuz restrictions, a senior Iranian lawmaker said on Tuesday.

Amir Hayat Moqaddam, deputy chairman of the Iranian parliament's National Security and Foreign Policy Committee, told the Iranian Students' News Agency (ISNA) that vessels from those countries pass freely and are not intercepted by US forces. Iran effectively shut the strait early in the US-Israel war on Iran, which began on February 28, and the US reimposed a naval blockade on Iran's southern ports in July.

What Iran says it gets

According to Hayat Moqaddam, Iran receives medicine from India and political backing from China. Qatar already gives diplomatic support and is leading mediation efforts to end the war. He said Tehran will collect transit fees from Indian and Chinese ships, while Qatari vessels pass without charge. He did not say whether Iraqi ships will pay a toll.

Analysts told Al Jazeera the exemptions raise practical questions. Rouzbeh Parsi, an Iran analyst at Lund University, said the move is about "poking holes in an embargo and getting crucial goods/services in and out," adding that barter trade is not new for Iran under sanctions. Nader Hashemi of Georgetown University said Iran is likely charging a transit fee or a share of cargo value.

Wolfgang Pusztai, a security and defence analyst and Austria's former defence attache to Libya, called the exemptions clever. If successful, he said, they could generate significant revenue, because China buys nearly 90 percent of Iran's total oil exports. By including Qatar, which has many LNG buyers, and India, Iran is also trying to undermine acceptance of Washington's strategy, he said.

Trade flows at stake

All four countries rely heavily on the strait. Muyu Xu, a senior crude oil analyst at Kpler, told Al Jazeera that of 10.23 million barrels a day of Gulf crude passing through in October, about 42 percent went to China and 13 percent to India. Qatar shipped no LNG through the strait in August but 1.8 million tonnes in October, Xu said. Qatar's crude transits fell from 517,000 barrels a day to 193,000, while Iraq's rose from 1.69 million to 2.65 million. Kpler could not trace up to two million barrels a day of Middle Eastern crude, so flows may be higher.

Iran began letting vessels from friendly countries pass within weeks of the war starting, and in April its military command said Iraq was exempt as a "brotherly" country. US Central Command says the blockade applies to all vessels entering or leaving Iranian coastal areas or ports, while ships avoiding Iranian ports are unaffected. Humanitarian shipments may pass after inspection.

Pusztai said it is unclear whether "ships of these countries" means the flag a vessel flies, its owner, its operator or some other link. He said the exemption could make the blockade harder to continue if Washington accepts it.

Talks and risks

Ending the blockade is one of Tehran's demands before it commits to broader peace talks with the US, which will include discussions about Iran's nuclear programme. Qatar-mediated talks centre on an Iranian proposal to reopen the strait if the US meets seven conditions, including lifting sanctions.

Chris Beauchamp, chief market analyst at IG Group, said the exemptions make only limited difference at present, with markets pricing in a peace deal. Safety is not guaranteed: on October 30, the Qatari LNG carrier Al Mayeda was struck by "unidentified objects" in the Gulf, owner Qatar Gas Transport Company said. More than 120 commercial ships have been hit in the region since the war began, with October the worst month, according to the International Maritime Organization and United Kingdom Maritime Trade Operations.

Source: Al Jazeera.