USD Pressured as Iran-Oman Hormuz Deal Threatens Oil Supply Routes

The US dollar faces potential headwinds as Iran and Oman reportedly near a landmark agreement to establish joint supervision of shipping through the Strait of Hormuz, bypassing direct US involvement. The strait handles approximately 20% of global oil supply, making this development a significant geopolitical risk factor for energy markets and currency pairs tied to oil flows. The proposed framework would replace decades of US-backed free navigation principles, potentially increasing uncertainty around crude oil transit and pricing. Rising oil prices typically pressure USD/JPY lower while supporting commodity-linked currencies such as CAD and NOK. Traders should monitor USD/CAD for potential downside as higher crude prices benefit the Canadian dollar, with key support near recent lows. USD/JPY may also see safe-haven flows into the yen if geopolitical tensions escalate. EUR/USD could see modest upside if dollar sentiment deteriorates on perceived loss of US strategic influence. Near-term volatility is expected across oil-sensitive pairs as markets assess the deal's implications for global energy security and trade flows.