When President Donald Trump’s announced that the U.S. had reached a deal with Iran that includes opening the Strait of Hormuz, it was sigh of relief for many. However, there’s a wrinkle. Iran has suggested that it intends to charge new “fees” for ships trying to travel the important waterway.
If Iran moves forward with those plans, it could add expenses and complications to the global oil trade, The New York Times noted this week. It could also set a “dangerous precedent,” according to the outlet.
Experts have noted that Iran could face legal challenge if it seeks to implement fees for ships sailing through the strait. For example, maritime experts cited by the Times said a toll – that’s a required payment for ships – would not be legal.
Per the Times, Iranian foreign ministry spokesman Esmaeil Baghaei, said Monday that Iran was “not seeking to levy transit tolls; however, fees will be charged in exchange for the services that are provided.”
Just calling a toll a “fee” wouldn’t be enough to make the charges legal, said the maritime experts consulted by the Times. Fees could legally be charged for services provided, sch as waste services when ships arrive at port.
“Iranian officials have said they might assess environmental charges,” the Times said.
Iran began blocking traffic at the Strait of Hormuz after the U.S. joined Israel in an attack on the country in late February. Trump has said that one of the aims of the attack was to stop Iran’s nuclear program. Though he initially expected the conflict to be short, it dragged on for months, and the blockade shook up the global oil industry throughout the spring. In the U.S., average national gas prices shot up to more than $4 per gallon and they remained there as of Tuesday, according to data from AAA.
“In March, Iranian officials said they would start to charge ships traveling in the waterway, and by May, Iran had established the Persian Gulf Strait Authority, which it said would manage ‘safe passage permits,’ the Times noted. Last month, Iran and Oman discussed a payment system based on fees for services.
According to a June 8 report from the Brookings Institution, ship traffic through the strait was at a near-standstill, “except for a small number of vessels that have paid a ‘toll’ to the Islamic Revolutionary Guard Corps (IRGC) in exchange for safe passage.”
Before the U.S. attacks, travel in the strait had been free. Trump told the Times Monday that the strait would be “permanently toll-free” upon reopening.
“How the reopening of the Strait of Hormuz is managed will be something to watch closely. While Iran may agree to not charge ‘tolls,’ service fees and other mechanisms have been floated,” said Elisa Ewers, a senior fellow for Middle East studies at the Council on Foreign Relations. “Getting as close as possible to status quo ante will be important for global commerce, for allies to avoid setting dangerous precedents for other waterways, and for regional partners, who will need to live with the arrangements.”
James R. Holmes, chair of maritime strategy at the Naval War College, questioned what services Iran could provide for the Strait of Hormuz, a natural waterway. He noted that man-made canals such as the Panama Canal and Suez Canal, require management.
“As best I can tell the only service Iran would be charging for is not attacking shipping,” Holmes said. He also said there is “no provision in international law for a coastal state charging for passage through a natural waterway.”
Brookings’ June 8 report said that allowing Iran to charge tolls (potentially $1 per barrel of oil, or around $2 million per transit) at the strait is “deeply problematic” as it could become a source of revenue for the IRGC and it could set a precedent for other waterways. Other countries could potentially start charging tolls at the Strait of Malacca, the Strait of Gibraltar, and the Danish Straits.
“This would undermine freedom of navigation, the principle that the U.S. Navy has secured and protected for decades,” the Brookings report said.
In another June 8 report, Brookings experts said that a “potentially more significant development is Iran’s reported preference for ships from allies, such as Russia and China, or those with ties to Iran, such as India and Pakistan,” at the strait. Vessels are required to obtain permission to transit the waterway by filling out a form with information about cargo, vessel origin and destination, the vessel’s owner and the nationalities of the crew.
“Once access becomes politically conditioned, states can use it to pressure adversaries, reward partners, generate economic rents, and strengthen politically aligned commercial networks,” the experts warned.
According to the Times, the “notion of a potential charge,” at the strait “has raised concerns among world leaders that the Strait of Hormuz may never return to its prewar status quo.” French President Emmanuel Macron of France stressed the importance of making sure there is not a toll at the strait in an interview on Monday.
While Trump promised that the strait would be “permanently toll—free” this week, the Times also noted that he “introduced the idea that the United States could itself charge money in the strait as the self-declared winner of the war,” in the past, before dismissing the notion last month. Secretary of State Marco Rubio has also rejected the idea of toll at the strait.
Here in the U.S., Trump’s attempts to collect fees from tariffs have met legal challenges from our own Supreme Court. As for whether U.S. gas prices will get back to last summer’s prices any time soon, the Council on Foreign Relations said that it could take months yet for oil prices to return to normal and that the waterbed needs to be scoured for mines, a process that could take weeks.
