Iran’s imposition of tolls on ships passing through the Strait of Hormuz looks set to become a key point of contention in negotiations that kick off in Pakistan on Friday.
When the United States and Israel launched an attack on Iran on February 28, Iran responded by blocking passage through the key strait to all but a handful of vessels.
While Iran agreed to reopen the channel during a two-week truce with the United States, it also talked about a toll system to fund reconstruction after attacks by the United States and Israel.
The European Union quickly condemned the idea on Thursday. However, US President Donald Trump’s stance seems more ambivalent.
Given that one-fifth of the world’s oil passes through in peacetime, as well as large quantities of natural gas and fertilizers, the stakes are high.
Shipping lines are expected to pay up to $2 million per ship, according to Bloomberg.
The Financial Times said the price paid would be one dollar per barrel of oil, payable in cryptocurrency or the Chinese currency yuan.
– Iran maintains control –
The temporary reopening of the strait was announced on Tuesday as part of the U.S.-Iran ceasefire agreement. Nonetheless, insurance experts Lloyd’s noted: “Iran’s approval system for Hormuz transit remains intact.”
They added that at least some vessels face “slow, opaque verification processes and, in many cases, multimillion-dollar toll requirements.”
One of the key points in the ten-point plan Iran sent to Washington to end the war was that Tehran would maintain control of the Strait of Hormuz.
“There is a new mechanism under which a new right of passage is organized with Oman, which also borders the strait,” an Iranian diplomatic source told reporters.
Freedom of circulation is a fundamental principle of maritime law. The only access points with toll booths are the Suez and Panama Canals, both of which are man-made structures that require maintenance.
“Paying tolls legitimizes Iranian coercion and sets a precedent in international law that other regimes may want to follow,” wrote Guntram Wolf, a senior fellow at the Brussels-based think tank Brueghel.
US President Donald Trump has suggested that the US and Iran could operate the system in a “joint venture”.
However, White House spokesperson Carolyn Leavitt warned that Washington has not yet taken a clear position on the matter.
But she added that Trump “wants to see the Strait reopen immediately and without restrictions, and that’s something we will insist on”.
-“legitimate toll booth”-
For some analysts, the most credible scenario is some kind of partnership between Oman and Iran, which border key sea lanes.
“If Iran and Oman can reach a resolution and establish some kind of legal toll gate, a structure where ships can pass through the strait, Iran will receive compensation funds,” said Michelle Brouhard, an analyst at global market experts Kpler.
Revenue from such systems could bring Iran $70 billion to $90 billion annually, JPMorgan Chase said, based on Bloomberg estimates.
Amir Hanjari, an analyst at the US-based Quincy Institute for Responsible Statecraft, told AFP that the Strait of Hormuz is “more important to Iran than enriching uranium”.
“This is a real security guarantee against future attacks by Israel and the United States,” he said.
“Oman gains more strategic relevance and a revenue stream that they really need,” he added. In a video released on Wednesday, Transport Minister Said bin Hamoud bin Said Al Mawali said tolls were prohibited by international conventions signed by Oman but that talks were ongoing with the foreign ministry.
The video was later deleted.
Analyst Hanjari said Oman’s policy toward Iran is not “in sync” with that of the Gulf Cooperation Council. The Gulf Cooperation Council consists of the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Bahrain and Oman.
As for the United States, they may agree to charge tolls if payment is made in dollars rather than yuan, he said.
– Gulf countries divided –
Amena Becker, another analyst at Kepler, said other Gulf monarchies would suffer serious losses.
“When it comes to Hormuz, the GCC side’s position is very clear … they will not accept Iran controlling the flow,” she said.
It was also unclear how such a charge would be determined, she added.
Sultan Ahmed Al Jaber, head of the United Arab Emirates’ state energy company ADNOC and the UAE’s industry minister, condemned any issue of charges.
“The weaponization of this vital waterway, in any form, will not be tolerated,” he insisted on Thursday. “The Strait must be fully, unconditionally and unrestrictedly open.”
The European Union took a similar stance on Thursday. Commission spokesman Anouar El Anouni told reporters that freedom of navigation means “basically no fees or tolls to pay.”
But for the Quincy Institute’s Hanjari: “It really comes down to three things.
“The United States, Oman and Iran will decide the fate of the Strait of Hormuz. The United States is the weakest in the region.”
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This article was generated from automated news agency feeds without modifications to the text.
