'Game on’: How Iran can exact a toll in the Strait of Hormuz
An Iranian marine pilot boards a Greek-owned tanker destined for Japan with Kuwaiti crude oil. The vessel’s captain has already received a clearance code over VHF radio to enter Iran’s territorial waters. The day before, the vessel’s charterer made a six-figure payment in US dollars to a bank in Oman linked to the Iranian government.
If negotiations between the US and Iran in Pakistan end with a peace deal, this process could be repeated daily, formalising Iran’s control over one of the world’s most important chokepoints, the Strait of Hormuz.
To understand how Iran could monetise its newfound control of the waterway with the US’s bitter acceptance, Middle East Eye spoke with half a dozen maritime security experts, ship owners, international law experts, and energy traders.
The first thing Iran will have to do to make transit fees palatable to the US in the eyes of the international community is change the name of what it wants to do, experts say.
“The better way to phrase it is a fee for service as opposed to a toll,” Donald Rothwell, an expert on the law of the sea at Australian National University, told MEE.
Iran effectively closed the strait after it was attacked by the US and Israel. Countries whose coasts border international straits are prohibited from restricting transit through their territorial waters, but can suspend it to belligerents and even third countries in the name of maritime security during war, Rothwell said.
Iran, of course, did so by attacking commercial vessels in violation of international law, along with attacking its Gulf neighbours. It has also declared neighbouring Oman’s territorial waters a “hazardous” zone.
But the Trump administration, which has considered annexing Greenland and parts of Canada, may not quibble over the technicalities of international law, experts say.
Neither the US nor Iran has ratified the United Nations Convention on the Law of the Sea (UNCLOS).
'Beautiful thing'
US President Donald Trump has vacillated on the matter. He said it would be “a beautiful thing” if the two countries could share toll proceeds, but then said, “[Iran] better stop now” if it is charging fees.
'The Iranian position has some merit'
- Donald Rothwell, expert on law of the sea
Rothwell said that right now Iran was in “a twilight zone, pending a finalised peace deal” with the US and Israel. If a final resolution to the conflict is reached, Tehran would have no legal cover under international law to keep the strait closed, and the US would also face global ridicule if it went along with an official toll in the waterway.
“But the Iranian position has some merit,” Rothwell said.
“Iran can say that we are in a difficult position regarding a ceasefire because Israel and the US could unilaterally recommence military operations; therefore, we need to ensure any vessel passing through Iranian waters does so safely, and we will escort them, which is a service.
Only countries with man-made canals, such as Panama and Egypt, can charge tolls, but there is some wiggle room for states that lie on international straits to charge fees for services. For example, Australia imposes a mandatory pilotage fee on vessels transiting the Torres Strait, which it shares with New Guinea, because the waterway is so dangerous to navigate.
Likewise, under the 1936 Montreux Convention, Turkey charges a tonnage fee on vessels passing through the Bosphorus and the Dardanelles, which goes toward safety, rescue, and health inspection services.
“This is not in the same spirit as the Turkish situation,” Jason Chuah, a professor of Maritime Law at City St Georges University of London, told MEE.
“But with caveats in mind, there are a couple of examples they (Iran) can draw on,” he said.
Right now, Iran is controlling transit through the strait in a very primitive manner, experts say. Before the war, roughly 130 vessels were transiting the waterway each day. Between 8 and 9 April, just 14 vessels made the journey, and nearly two-thirds of those were sanctioned or part of the so-called shadow fleet, according to Marine Traffic analytics.
Some vessels that do get through must provide documentation, including a bill of lading, crew manifests, insurance, and last and next ports of call, so Iran can check that they are not affiliated with Israel or the US, Martin Kelly, the head of advisory at the EOS Risk Group consulting firm, told MEE.
“Countries that have embassies in Iran are able to facilitate this, but even with government-to-government approval, it’s not clear that the ship will get through,” Kelly said.
On Friday, a Russian-flagged supertanker entered the Gulf through the Strait of Hormuz. Russia is one of Iran’s closest partners. Pakistani, Indian, and Chinese vessels have also made the journey.
Scalable
One standout among vessels affiliated with the West has been Greek vessels. Several tankers belonging to Dynacom, a shipping company owned by Greek magnate George Prokopiou, have navigated the strait. A ship owner familiar with the matter told MEE that the vessels had paid transit fees to Iran in Chinese yuan.
While the Chinese currency has been floated as a method of payment, the head of Iran’s oil, gas and petrochemical products exporters’ union told the Financial Times recently that Tehran wanted payment in cryptocurrency.
Joshua Hutchinson, the chief commercial officer at British maritime security firm Ambrey, told MEE that it appears Iran lacks a coherent plan for the system it wants to establish.
'The Islamic Revolutionary Guard Corps is disconnected from the politicians right now. So the communication by Tehran has been problematic'
- Joshua Hutchinson, CCO Ambrey
“The Islamic Revolutionary Guard Corps is disconnected from the politicians right now. So the communication by Tehran has been problematic,” he told MEE.
He said that shipowners who want to transit the strait, potentially in the hope of making a handsome profit from sky-high shipping rates, have plenty of options of who to contact. In addition to Iranian embassies, there are Iranian ship brokers.
Although Iran is under crippling US sanctions, some brokers work with reputable Protection and Indemnity clubs in the West. One firm, Calm Sea Culture Marine Services, has emerged as a point of contact for some western ship owners, a broker told MEE.
“The problem is not contact. It's payment,” Hutchinson said. “Iran has not communicated a clear, scalable payment scheme”.
“I think that will happen. It’s just happening slowly because the government and military are disconnected,” he said.
Iranian officials have told several news outlets that they want to impose $2m tolls on vessels, or charge $1 per barrel of oil transported on tankers. But maritime experts say the easiest way for Iran to impose a fee would be on a per-tonnage basis.
Iran has shown the world it can shut down traffic through the strait, but it will actually need buy-in from key parties if it wants to monetise that control in a meaningful way, experts say.
Maria Bertzeletou, senior analyst at Signal Group, a shipping services firm, told MEE that it's up to ship owners if they want to send vessels into the Gulf.
With shipping rates at all-time highs, pricy routes, like shipping Venezuelan oil to India, a long, profitable journey, are skyrocketing because of the war, so ship owners may not be willing to take the risk, Bertzeletou told MEE.
“At the end of the day, it depends if owners are willing to pay the fees Iran wants and take the risk. Maybe they will prefer to send their vessels on other routes,” she said.
Even with the peace deal, traffic may not return.
Yuan, USD or cryptocurrency?
For example, the Houthis stopped attacking vessels in the Red Sea in May 2025, but traffic there is still down by half in metric tonnage, according to Bloomberg.
“We could see a bifurcation of the strait with different attitudes between Asian and western shipowners,” Bertzeletou said.
'We could see a bifurcation of the strait with different attitudes between Asian and western shipowners'
- Maria Bertzeletou, Signal Group
“I have a feeling that some western ship owners could sell some second-hand tankers to Asian owners who have an appetite to cross the strait, while Western owners focus on other routes,” she said.
Toby Copson, a portfolio manager at Davenport Energy, said it was still too early to know when energy might start flowing in large volumes again and how fees would be paid.
“It will be cloak and daggers for some time,” he told MEE. “The Chinese vessels that are getting through right now, I guarantee you that they are not paying.”
But rates for VLCCs, the Very Large Crude Carriers, which are the workhorses ferrying crude from the Gulf to Asia, have shot up to historic highs. Oil and liquefied natural gas prices have also soared.
“This fee Iran wants to change could be absorbed so quickly given the spike in oil prices” Copson said. “In the current pricing climate, the shippers would be stupid not to pay it.”
Where the US still holds the key for Iran is sanctions. “Any payment made to the IRGC is going to run afoul of sanctions,” Chuah, at St Georges University, told MEE.
Iran wants sanctions lifted as part of a peace deal. That demand is included in a 10-point plan that Iran shared this week, and which Trump said was a “workable” basis to negotiate.
Although most western ship owners are accustomed to working in US dollars, Copson said that Iran could easily collect its fees in cryptocurrency or yuan. The latter is a simple process, he said.
“You do a foreign exchange conversation, buy non-domestic renminbi and send that to the Iranians,” he said. “The Iranians will send that to the Chinese, who will clean it in gold or USD.”
“It’s not overly complicated. But they should push for cryptocurrency,” he said,
However, other watchers say that the Trump administration would be reluctant to agree to any fee-for-service arrangements that do not include dollars, particularly given how the war has sparked a broader discussion about de-dollarisation.
“If there was agreement between the US and Iran, the maritime industry would have to hold its nose and pay the fee,” Chuah told MEE.
Greek shipowners and the Chinese might learn to live with an agreement, but the Trump administration will face intense pressure from some of Iran’s energy neighbours, who would be loath to see Tehran cement its control of the strait.
At the front of the list is the UAE, which is closely aligned with Israel and staked out one of the most muscular positions against Iran amid the war. Anwar Gargash, the diplomatic adviser to the Emirati president, said this week that the UAE would have to reassess its alliances following the war.
Sultan al-Jaber, the head of Abu Dhabi’s state-owned oil company, said this week that despite the ceasefire, the Strait of Hormuz was not open and that Iran was using “coercion” to restrict passage.
“Big oil majors and Gulf states absorb a fee, but it will set a very bad precedent,” Chuah said.
But others say countries like the UAE may not have a choice. “If Trump lifts sanctions on Iran, it will be game on,” Hutchinson at Ambrey said.
This article was sourced from Middle East Eye.
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