The Strait of Hormuz, the vital waterway that links the Persian Gulf to the Indian Ocean, has held global attention since the United States and Israel launched a war on Iran over five weeks ago. In response to US-Israeli attacks, Tehran started attacking “enemy” merchant ships in the strait, effectively halting passage for all vessels, and creating one of the worst-ever global energy distribution crises.
Iran refuses to give up its control over the passage and reopen the strait completely, even as US President Donald Trump has agreed to a two-week ceasefire to negotiate terms for permanent peace. Iran wants de facto control over the waters and wants to charge oil tankers a transit fee for passage through it, as part of its 10-point proposals to end the war.
Iran’s demand remains unpopular with the United States and other nations, as before the fighting began, the narrow channel remained toll-free and safe for vessels. Even international sea law says states bordering straits cannot demand payment simply for permission to pass through. But, given that Israel and the United States have already spent weeks pounding Iran, it is hard to say what the international community could do about the Iranian demand.
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Inside Iran’s Hormuz Demands
The Strait, a strip of water only 34 km wide between Iran and Oman, provides passage from the Gulf to the Indian Ocean and is the main route for about a fifth of world oil supplies and other vital goods, including fertilisers. Iran wants any permanent peace deal with the US and Israel to end the war, to allow Tehran to demand fees for ships passing through the strait, according to a Reuters report.
According to the report, the fee would vary depending on the type of ship, its cargo, and unspecified other prevailing conditions.
Iran’s deputy foreign minister, Kazem Gharibabdi, said last week that Tehran was drafting a protocol with Oman to require ships to obtain permits and licences to pass the Strait, saying the move was intended to facilitate rather than restrict transit. Muscat, however, later appeared to have rejected this proposal, saying there are no plans to do so.
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What Has Iran Done So Far
A small number of ships have passed through the Strait since Iran’s Islamic Revolutionary Guards Corps blocked it off at the start of the war, firing on some vessels in the Gulf. Media reports have claimed that at least one payment of $2 million has been made for a vessel to traverse the Strait, but NDTV was unable to confirm that.
Reports also claimed that Iran is now planning to demand tolls in cryptocurrency from shipping companies to let their oil tankers pass through the Hormuz. The demanded toll is reportedly $1 per barrel of oil, according to a Financial Times report.
What International Law Says
The United Nations Convention on the Law of the Sea (UNCLOS), which governs international sea law, says that countries bordering straits cannot demand payment simply for permission to pass through.
However, they can impose limited fees on ships for specific services such as piloting, tugging or port services, though these may not be levied more heavily on vessels from any particular countries.
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International Waters With A Fee
Canals, which have been dug rather than occurring naturally, are treated differently from straits. Egypt and Panama each charge fees to pass through the Suez Canal and the Panama Canal.
The Turkish straits – the Bosphorus, Sea of Marmara and the Dardanelles between the Black Sea and the Mediterranean – are governed by the 1936 Montreux Convention, guaranteeing free passage for merchant vessels in peacetime. That convention allows Turkey to levy standardised charges to cover the cost of services but does not allow it to impose a general transit fee.
Singapore does not charge a fee to transit the Singapore Strait.
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How Iran’s Demand Affects Neighbours
No such unilateral move to demand fees to traverse a strait has been made in modern history, according to a Reuters report.
Gulf states relying on energy exports through the Strait are particularly concerned. The UAE said the waterway “cannot be held hostage by any country” and free navigation must be part of any war settlement.
Qatar’s foreign ministry said all countries in the region have the right to use the Strait freely, and any discussions about future financial mechanisms should wait until after it is reopened.
US President Donald Trump has also demanded that free traffic of oil through the Strait must be part of any peace deal with Iran.
However, given that Israel and the United States have already spent weeks pounding Iran, it is hard to say what the international community could do to force it to allow free passage through the Strait of Hormuz.
Any military endeavour to keep the Strait open would likely involve a major, prolonged ground operation along a mountainous coast against well-entrenched Iranian forces able to target vessels from far inland.
China, a world power that still has strong ties with Iran and is the biggest importer of energy shipped through the Strait, could have more influence than other countries.