The Iran war has evolved into a power struggle over the Strait of Hormuz—a vital global chokepoint for oil, natural gas, fertilizers, and other commodities.
If the conflict ultimately results in the Strait of Hormuz falling under the permanent control of either Iran or the United States, it could mean the end of the principle of free passage on the high seas that has underpinned global trade for centuries. "This could set a dangerous precedent, significantly increasing the costs of international maritime trade, which will ultimately be passed on to end consumers," said Eric Glenn, senior analyst at consulting firm Rystad Energy. Following the US-led attacks on February 28, Iran almost immediately closed the Strait of Hormuz, creating the largest oil supply shock in history. Having gained new leverage over the global economy, Tehran is struggling to maintain it. Ships wishing to transit the strait must either coordinate with Iran's newly established Persian Gulf Straits Authority (which could involve hefty fees) or risk attacks by Iranian armed forces.
Rob Tummel, senior portfolio manager at Tortoise Capital, points out that if tolls in the Strait of Hormuz become the norm for waterway transport, transportation costs could rise. While the fees are certainly a concern, they are not the primary issue.
It has been reported that Iran previously charged oil tankers $1 to $2 per barrel, amounting to approximately $2 million per large crude carrier (VLCC). However, even if shipping companies were willing to pay, insurers would refuse to insure vessels paying sanctioned entities, including several key Iranian entities.
Nigel Green, CEO of financial advisory giant deVere Group, stated, “Leaving aside legal disputes, insurers will address this issue first. Underwriters may simply stop underwriting for fees involving sanctions risks.” Even if the fees are collected by third parties like Oman, the charges could still violate international maritime law, including the United Nations Convention on the Law of the Sea, giving insurers the right to refuse voyages or terminate insurance.
A broader concern is that the tolling model for the Strait of Hormuz could set a precedent for other global chokepoints, encouraging countries and regions like Indonesia, Singapore, and the UK to weaponize geographical advantages. According to senior analysts at Rystad Energy, the world's top ten chokepoints, including the Strait of Hormuz, Gibraltar, Dover, and the Strait of Malacca, could potentially generate over $136 billion in toll revenue annually, representing a huge untapped opportunity for sovereign revenue. "A world where chokepoints are monetized is likely to be more inflated, more divided, and more militarized," the analysts said.
