Tehran is trying to formalize — and monetize — its control over the Strait of Hormuz, previously a transit point for one-fifth of the world’s oil and gas, by charging a fee for passage.
What Iran is proposing violates the rules on which international shipping is based, which hold that countries cannot charge for safe passage through international waterways, and is unlikely to succeed, analysts say. Still, it is unsettling the shipping industry, heaping more uncertainty on companies with vessels and workers who have been stranded in the Persian Gulf for nearly three months as the war in Iran drag on.
The concern is that Iran, emboldened by having brought the United States to an impasse by invoking a powerful geographic choke point, could find a way to influence traffic through the strait even after the conflict ceases. The Iranian threats underline the war’s potential to do lasting damage to the global economy.
A toll payment system would not be acceptable, Arsenio Dominguez, the head of the International Maritime Organization, said in an interview on Friday. He spoke after it emerged this week that Iran and Oman, a U.S. ally that borders the strait, were in discussions about a system to charge fees for passage through the strait.
“I’m not entertaining conversations relating to mandatory tolls, things that go beyond the freedom of navigation, the right of innocent passage,” said Mr. Dominguez, whose organization, a United Nations agency, regulates global shipping.
Michelle Wiese Bockmann, an analyst at the maritime intelligence firm Windward, said she believed Iran’s plans were posturing in its prolonged standoff with President Trump.
But the stakes are high. According to the U.N. Conference on Trade and Development, 11 billion tons a year of global trade is transported by sea.
“If you remove that principle of freedom of navigation in the Strait of Hormuz, then where do you draw the line?” Ms. Bockmann said. “That then opens up other choke points to negotiations in times where there are contested waters.”
Iran has cast its proposal as charges for service, a transit fee or environmental charges. Under international law and conventions, countries that oversee certain artificial waterways, including the Panama Canal and the Suez Canal, may charge fees, while straits used for international navigation must be free.
In addition to the legal issues, a major reason for the unworkability of Iran’s plans comes down to insurance, Ms. Bockmann said. Ships that make payments to Iran could be violating sanctions by the United States and other Western countries, and insurers will therefore be hesitant to provide them coverage. f
The U.S. Treasury Department has issued warnings as recently as this month to ship operators not to make payments to Iran, and many European governments have their own sanctions on Iran. No Western company has publicly stated that it has made any payments to Iran. As desperate as they are to free their vessels unable to leave the Persian Gulf, most shippers are unwilling to engage in such transactions, industry officials say.
Mr. Trump said Thursday that the United States would not condone any toll system on passage through the strait. “We want it free,” he said in the Oval Office. “We don’t want tolls. It’s international. It’s an international waterway.”
Still, Iran announced new steps this past week to consolidate control over the waterway.
On Monday, Iran launched a regulatory agency it called the Persian Gulf Strait Authority to run operations in the strait, including overseeing a charge, which could reach as high as $2 million per vessel. And last Saturday, Iran introduced a plan, called Hormuz Safe, that would allow shipping companies to pay the government for insurance coverage, using cryptocurrency, while transiting the strait.
The Islamic Revolutionary Guards Corps Navy has said that the only safe route for transit in the strait is via a corridor designated by Iran, and that any ships that deviate from this path risk attack.
India, Iraq, Pakistan and other countries have negotiated arrangements with Iran to get their ships through. But the primary entities paying fees to the Persian Gulf Strait Authority include owners of so-called shadow fleet vessels linked to China and the United Arab Emirates, according to Windward.
On Wednesday, Iran said it was significantly expanding the area it claims to control to waters around the Strait of Hormuz, including part of the Gulf of Oman, which is adjacent to the strait.
After U.S. and Israeli forces attacked Iran in late February, Iran brought traffic in the strait to a near halt, causing energy prices to skyrocket. About 1,500 ships and 20,000 seafarers remained stranded in the Persian Gulf, and traffic through the strait has dwindled to a trickle. Before the closure, upward of 130 ships went through the strait daily.
Oscar Seikaly, chief executive of NSI Insurance Group, an insurance broker, said Iran’s attempts to exert control over the waterway would not be effective. A U.S. blockade is policing waters beyond the strait to hunt down Iranian vessels, leaving Iran unable to export its own oil as it tries to establish a counternarrative that it has control.
“They don’t control anything,” he said.
As of Thursday, the U.S. Central Command had redirected 94 commercial vessels and disabled four. Because of Iran’s inability to export its crude oil, Iran is expected to soon run out of storage space for the oil it produces. Its storage facilities at Kharg Island, Iran’s primary oil export terminal, are more than 80 percent full, according to Kpler, a maritime data firm.
A risk of Iran’s threats to take control of shipping through the Strait of Hormuz is that other countries may start considering what leverage they could exert over the international straits they border.
One such area is the Strait of Malacca, a critical waterway bordered by Indonesia and Malaysia in Southeast Asia. Last month, Indonesia’s finance minister made a brief public comment about imposing tolls at the strait, which vessels currently transit free of charge, in line with international law.
The remark touched a nerve. The idea of starting to charge tolls at the Strait of Malacca was quickly shot down — by the foreign minister of Malaysia as well as another Indonesian official.
