Iran Seeks Billions in Hormuz Toll Demand

Experts remain skeptical of the legality and feasibility of such a move. James Kraska, a professor of international maritime law at the US Naval War College, stated that imposing transit fees constitutes a violation of the rules of transit passage. According to Kraska, there is no legal basis under international law for a coastal state to charge fees in an international strait like Hormuz. He explained that while the Strait of Hormuz involves overlapping territorial seas of Iran and Oman where both laws apply, the status as an international strait ensures the right of transit passage for all states. This right permits unimpeded surface, overflight, and submerged transit. These rules are set out in the UN Convention on the Law of the Sea (UNCLOS). Although neither Iran nor the United States is a party to the convention, Kraska noted that many of its core principles apply as widely accepted customary international law.

There is little historical precedent for a state successfully charging for passage through an international strait. Kraska pointed to the 19th century, when Denmark imposed transit fees through the Danish Straits. Following protests from multiple states, Denmark agreed to the Copenhagen Convention of 1857, which permanently abolished the so-called Sound Dues. Despite this history, Iran is exploring what a tolling system could look like and how lucrative it might be. Experts question whether Iran could establish a tolling system that would gain international acceptance, but if it does succeed, revenues could rival those generated by Egypt's Suez Canal.

CNN calculations suggest the financial stakes are enormous. Normally, around 20 million barrels of crude oil and oil products pass through the Strait of Hormuz each day, roughly equivalent to about 10 very large crude carriers (VLCCs). At a reported fee of $2 million per tanker, this would translate to around $20 million a day, or about $600 million a month, from oil alone. If LNG shipments are included, that figure could rise to more than $800 million a month. This potential revenue is equivalent to about 15%-20% of Iran's monthly oil export revenue in 2024. For comparison, Egypt earns between $700 and $800 million a month from the Suez Canal in a typical year, though revenues have dropped sharply over the past year due to Red Sea disruptions.

The drive to monetize Hormuz may also be fueled by Iran's severe economic pressures. Esfandiary stated that Tehran views charging for passage as a method to "make up for some of its economic shortfalls" under sanctions, describing it as a relatively "easy" and "low-cost" mechanism to compensate for restricted access to global markets. Iran remains one of the world's most heavily sanctioned countries, second only to Russia. Officials claim the Strait remains open but not unconditionally, stating that "non-hostile" vessels may transit only if they coordinate with Iranian authorities. The foreign ministry conveyed this position in a letter to the UN Security Council and the International Maritime Organization.

Tehran appears to be testing a controlled system of passage in practice. Ship-tracking data indicates some tankers are using a route closer to Iran's coast, with reports that certain operators may have paid for safe passage. Lloyd's List reported that more than 20 vessels have used a new corridor through the strait, with at least two ships understood to have paid to do so, one reportedly around $2 million. Although no country, importer, or ship operator has publicly acknowledged paying a fee, and details remain unclear, the Islamic Revolutionary Guard Corps has established a registration system for approved vessels. Richard Meade, editor in chief of Lloyd's List, noted that the shipping industry is effectively in paralysis, predicting the practice will increase if negotiations do not progress.

Iran's Strategic Pivot on Hormuz

Iran's new demand to formalize tolls at the Strait of Hormuz represents a calculated shift from defensive threats to active economic weaponization, driven by a desire to generate billions in revenue and mitigate the crushing effects of international sanctions. If Tehran successfully implements a tolling system, the global maritime community faces a precedent-setting disruption that could fundamentally alter international trade laws. While the US and its allies have warned that such a move violates customary international law and threatens global energy security, the immediate paralysis in the shipping industry suggests the strategy is already influencing vessel routes and operator behavior. The long-term impact hinges on whether the international community can enforce toll-free navigation or if Iran's economic desperation will force a new, costly equilibrium for global energy transit.