Iran's Strait of Hormuz Transit Fees Test Maritime Law and Global Oil Flows

For four months the Strait of Hormuz — the narrow channel between Iran and Oman through which around a fifth of the world's seaborne oil and a comparable share of its liquefied natural gas must pass — was the most dangerous stretch of water on the planet. It has since become the testing ground for one of the most contested ideas in international law: whether the state that sits astride a global chokepoint can charge the world for the right to cross it.

Since 28 February 2026, when the United States and Israel launched air strikes on Iran, Tehran's Islamic Revolutionary Guard Corps (IRGC) all but closed the strait — warning ships away, boarding and attacking merchant vessels and laying sea mines. As a fragile, US-brokered truce now reopens the waterway, the confrontation has shifted from gunboats to invoices.

A tollbooth on the world's oil artery

Rather than simply blocking traffic, the IRGC built what shippers describe as a customs checkpoint at sea. Vessels seeking passage had to submit their IMO number, cargo manifest, crew list, ownership details and destination to approved intermediaries before being cleared — and, in many cases, to pay. Tankers were charged as much as $2 million for a single transit, according to reporting by Bloomberg and NBC News, with at least two payments settled in Chinese yuan, Lloyd's List Intelligence found.

In May, Iran formalised the arrangement, creating a Persian Gulf Strait Authority to vet and license movements. Iranian officials have been unusually candid about the rationale.

Now, because war has costs, naturally we must do this and take transit fees from ships passing through the Strait of Hormuz.

That was Alaeddin Boroujerdi, a member of the Iranian parliament's national security commission, confirming the charges to Iran International. The selective pattern of who pays and who is waved through — exemptions reportedly extended to Chinese, Indian and Russian cargoes — bears, analysts say, the hallmarks of coercion: reward the compliant, squeeze the rest.

'Fees, not tolls': a fight over the law of the sea

Tehran insists it is not levying a toll. "We do not charge tolls," the foreign ministry spokesman, Esmail Baghaei, said, framing the money instead as payment for navigation, security and environmental services delivered under a joint mechanism with Oman.

Maritime lawyers and regulators reject the distinction. The UN Convention on the Law of the Sea (UNCLOS) guarantees ships the right of "transit passage" through international straits and forbids the bordering states from hampering it. Arsenio Dominguez, secretary-general of the International Maritime Organization, said there is "no international agreement where tolls can be introduced for transiting international straits." The often-cited counter-examples do not hold: the Suez and Panama canals are man-made channels through sovereign territory, and Turkey's straits operate under their own treaty regime — none of them an open international strait like Hormuz.

Europe, heavily exposed to Gulf crude and Qatari gas, has treated the principle as seriously as the price. The European Union called on Iran to abandon the fees and rejected a proposed "joint venture" floated in Washington to share the proceeds. On 22 May the EU Council extended its legal framework to sanction those involved in impeding lawful transit and freedom of navigation, while the bloc's foreign policy chief, Kaja Kallas, raised the option of widening the Aspides and Atalanta naval missions to help safeguard the lane.

Markets, freight and a brittle truce

The financial shock was immediate. Brent crude climbed from the mid-$60s before the war to nearly $120 a barrel at its peak, crossing $100 for the first time in four years in early March. Tanker economics buckled: the benchmark rate to move two million barrels from the Middle East to China hit an all-time high of about $423,736 a day, according to LSEG data, while war-risk insurance premiums spiked so sharply that underwriters at times withdrew cover for the crossing altogether.

The diplomatic breakthrough came on 17 June, when President Donald Trump and his Iranian counterpart, Masoud Pezeshkian, signed a memorandum ending the dual blockade. Its text requires Iran to "make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only" from the Persian Gulf to the Sea of Oman. With tanker traffic resuming and global demand softening, Brent slid back below $73 a barrel by late June — roughly where it stood on 27 February, the eve of the war.

What happens when the 60 days expire is the unresolved core of the dispute. Trump says the strait will be "permanently toll-free" and Vice-President JD Vance has promised it will stay that way "for the long term"; Tehran signals it intends to resume charging. Shipowners, for their part, may not wait to find out. Many are "likely to resist, reroute via the Cape of Good Hope, or reduce volumes rather than comply," said Farzin Nadimi of the Washington Institute for Near East Policy — a flight that would lengthen voyages, lift freight costs and ripple into the price of everything from petrol to plastics.

For an internationally minded reader, the significance runs beyond this quarter's oil price. If a state can convert control of a chokepoint into a revenue stream backed by force, the world's busiest energy corridors acquire a new and destabilising kind of leverage — one that the next confrontation, in Hormuz or elsewhere, could be built to exploit.