Iran to Impose Transit Fees on the Strait of Hormuz, Claiming Control of Vital Oil Route

Iran intends to start charging "fees" on the thousands of ships that pass each year through the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world's oil flows, Tehran said as it moved to assert authority over the chokepoint in the wake of its ceasefire with the United States.

Under the memorandum of understanding that ended the recent war, Iran agreed to provide safe passage to commercial shipping "with no charge" for 60 days, with demining of the strait to be carried out during the first month. After that grace period, officials in Tehran say, vessels will be expected to pay for what Iran describes as navigational services.

The fees could be substantial. Iranian officials and analysts have floated figures of around $1 per barrel of oil carried, or roughly $2 million per transit, with the exact charge varying by the type of ship, its cargo and other conditions. Tehran has cast the arrangement as a historic victory, asserting that the strait is effectively under its control and signaling that a European naval escort plan for the waterway would not be welcome.

Western governments and maritime experts have reacted with alarm. Allowing Iran to collect tolls at Hormuz is "deeply problematic," one analysis warned, because the revenue could flow to the Islamic Revolutionary Guard Corps and because it could set a precedent for other states to tax passage through international straits elsewhere in the world.

The legal status of such fees is contested. The Strait of Hormuz is governed by the international law of the sea, which guarantees ships the right of transit passage through straits used for international navigation, and critics argue Iran has no authority to charge for simply allowing vessels to pass.

The waterway's importance is hard to overstate. At its narrowest, Hormuz is only about 21 miles wide, with shipping lanes squeezed into a fraction of that, and roughly 20 million barrels of oil — along with a large share of the world's liquefied natural gas — move through it every day. The vast majority of crude exported by Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran itself transits the strait, with no fully adequate pipeline alternative to bypass it.

President Trump has insisted that the free flow of oil through the strait must be part of any lasting peace with Iran, putting the new fee plan on a collision course with Washington just as the broader deal faces a revolt in Congress. With global energy markets watching closely, even the prospect of higher costs at Hormuz carries the potential to ripple through oil prices worldwide and to test how much leverage Tehran can extract from its position astride the chokepoint.