Should the territorial Power be neutral, the strait would be closed to hostilities, though it would probably be open to the "innocent passage" of belligerent ships of war.
It may be worth while to enquire how far this state of things would be affected by the Convention of 1888, were it to come into operation.

The _status_ of the canal in time of peace would be substantially untouched, save by the prohibition to the territorial Power to fortify its banks.
Even with reference to time of war, several of the articles of the Convention merely reaffirm well-understood rules applicable to all neutral waters--e.g.

that no hostilities may take place therein.

The innovations proposed by the Convention are mainly contained, as "M.B." points out, in the first article, which deals with the position of the canal when the territorial Power is belligerent.

In such a case, subject to certain exceptions, with a view to the defence of the country, the ships of that Power are neither to attack nor to be attacked in the canal, or within three miles of its ports of access, nor are the entrances of the canal to be blockaded.