Iran's Ambitious Plan to Monetize the Strait of Hormuz

Iran's Revenue Aspirations

Iran is aiming to transform the Strait of Hormuz into a significant revenue stream. According to a report from a prominent news outlet, the nation is contemplating imposing fees for vessels traversing the same waterway it previously blocked during the onset of the conflict. Sources familiar with the situation indicate that Iran estimates it could generate approximately $40 billion annually by charging ships for security, safety, and environmental services while navigating the strait. This revenue would be distributed among the involved nations, granting Tehran unprecedented financial influence over the waterway compared to its status before the conflict began. Iran is reportedly looking at other nations for inspiration, particularly Turkey's toll system for the Dardanelles, where ships pay a fee known as the gold franc to pass between the Black Sea and the Aegean.

Seeking Support for the Initiative

Iran Looking For Allies On The Plan

To garner support, Tehran is promoting this idea across the Middle East and has even reached out to China, as per Iranian officials. The objective is to involve its Persian Gulf neighbors in the arrangement so they can also benefit from the revenue.

During a recent visit to Oman, Iran's chief negotiator, Mohammad Bagher Ghalibaf, made it clear that control over the strait will not revert to its previous state.

U.S. Opposition to the Proposal

Washington Pushes Back Hard

Secretary of State Marco Rubio firmly rejected the proposal during a trip to the Middle East, cautioning that allowing tolls or fees on the waterway could set a dangerous precedent, leading to widespread disruption. Speaking in Bahrain, he asserted that no nation has the authority to impose charges for passage through international waters, emphasizing that such a condition would be unacceptable in any agreement. He also pointed out that Gulf nations had previously dismissed the idea of fees for crossing the strait.

Under a 60-day agreement aimed at resolving the conflict and restoring operations in the strait, Iran is tasked with clearing mines and must permit ships to pass without charge during this period. However, the agreement allows Iran, which does not recognize the maritime laws typically governing the strait, to have a say in how passage is managed in the future.

Significance of the Strait

Why The Strait Matters So Much

The Strait of Hormuz has become a focal point in the ongoing U.S.-Iran conflict and remains crucial to negotiations aimed at officially concluding the hostilities. Throughout the conflict, Iran has realized that its missile and drone capabilities grant it significant leverage over global shipping in this corridor. The agreement proposed by President Trump would allow Iran to participate in discussions regarding long-term control over the passage, as reported.

Iran has already established an insurance company that it claims ships must utilize to navigate the strait, and Iranian state media recently issued a warning that any transit outside its designated routes is extremely risky and against regulations.

Mixed Signals on Tolls

Conflicting Messages On Tolls

The U.S., Oman, and other Gulf nations continue to assert that the strait must remain free for use. Trump reiterated this position in a social media post, stating that there are no tolls, insurance fees, or other charges being sought or collected by Iran for vessels crossing Hormuz, although he did not clarify whether he would be open to future negotiations on the matter.

Oman adheres to international conventions that prohibit tolls on major shipping routes. Its Foreign Minister, Badr al Busaidi, reiterated this stance during a meeting with Rubio in Bahrain, emphasizing that any future arrangements for Hormuz would not involve transit fees. Following discussions this week, both Iran and Oman indicated that their talks focused on the types of services needed to manage the strait moving forward, along with the associated costs.

Increasing Shipping Activity

Traffic Picking Back Up

Shipping activity through the strait reached its highest level since the conflict began, with tracking data showing over 70 crossings on Wednesday. Prior to the war, the strait typically accommodated around 130 oil tankers daily. Some shipping companies remain cautious about crossing until a final agreement is established, although insurance costs for vessels using the strait have begun to decrease to pre-conflict levels.

Learning from Turkey

Looking To Turkey As A Blueprint

Iranian officials and mediators have reportedly discussed their fee proposal with both China and Egypt. According to the report, Iranian officials have privately suggested they would be open to U.S. participation in such a payment system, an idea that Trump has occasionally mentioned publicly. The model Iran is examining is based on the Dardanelles, a narrow waterway separating Turkey's European and Asian territories. A 1936 international agreement grants Turkey the authority to charge ships the gold franc fee for passage. Any vessel traveling from the Black Sea to the Mediterranean must navigate this route.

Legal Challenges Ahead

Legal Hurdles Stand In The Way

Iran would encounter significant legal challenges in attempting to replicate Turkey's system. James Kraska, a maritime law professor at the U.S. Naval War College, noted that Iran has already committed to international and regional agreements that prevent it from imposing unilateral fees on ships passing through. He also pointed out that Turkey's arrangement is a unique case that cannot simply be copied and applied elsewhere. Any fees Iran wishes to impose would require approval from all 176 member nations of the International Maritime Organization.