The Strait of Hormuz crisis has raised a question that could reshape global maritime trade. Can a country charge commercial ships for passing through an international strait? US President Donald Trump has proposed collecting a 20% payment on cargo in return for American protection of the route. Iran has also argued that it may collect transit or security fees.
However, the International Maritime Organization says international straits should remain open without tolls that restrict free passage.
The issue goes far beyond the US and Iran. If military protection becomes a reason to charge ships, other countries may try to introduce similar fees in the Strait of Malacca, Bab el-Mandeb, Gibraltar, and other major routes. This could increase shipping costs, weaken established maritime law, and place further pressure on oil, gas, commodities, and global supply chains.
What Is Transit Passage?
Transit passage is the right of ships and aircraft to move through straits used for international navigation. Under the United Nations Convention on the Law of the Sea, this passage must be continuous and reasonably fast. It allows vessels to cross a strait even when parts of the route fall within the territorial waters of a coastal state.
Countries bordering the strait may set rules for navigation safety, traffic lanes, pollution control, fishing, and customs. However, these rules must not discriminate against foreign ships or effectively block their passage. Coastal states are also required not to suspend transit passage, even during periods of political or military tension.
Can the US Charge Ships for Protection?
The US does not control the Strait of Hormuz and is not one of its bordering states. Sending naval forces to protect commercial vessels does not automatically create a legal right to charge every ship using the route.
Payment may still be possible through voluntary agreements. Governments or shipping operators could contribute to escort missions, mine-clearing operations, or a multinational security program. In this case, the payment would be for an agreed service, not for the right to cross the strait.
A compulsory charge based on cargo value would be far more controversial. It could function like a trade tariff and create disputes over cargo valuation, enforcement, insurance, sanctions, and ships that refuse to pay.
Can Iran Charge Ships Passing Through Hormuz?
Iran has a stronger geographical position because part of the Strait of Hormuz lies within its territorial waters. However, this does not give Iran full control over international passage. Ships using the strait still have transit passage rights under established maritime law.
Iran may charge for specific services, such as port entry, pilotage, towing, or emergency assistance. A compulsory fee for simply crossing the strait would be far more difficult to justify. It could also be challenged as an attempt to restrict international navigation.
Transit Toll or Service Fee: What Is the Difference?
A transit toll is charged simply because a ship uses a waterway. A service fee is linked to something specific, such as pilotage, towing, rescue support, or port access. This difference is important because international law generally protects passage through major straits, while allowing charges for services provided.
| Type of Charge | How It May Be Treated |
| Mandatory fee for crossing the Strait of Hormuz | Likely to conflict with transit passage rules |
| Voluntary payment for naval protection | Possible through an agreement |
| Charge for pilotage, towing, or rescue | Usually acceptable when the service is provided |
| Port entry or cargo-handling fee | Normally permitted |
| Insurance or war-risk premium | A private commercial cost |
| Cargo-based security charge | Legally and commercially controversial |
| Fee created through an international treaty | Possible if accepted by the countries involved |
What Happens If Hormuz Fees Become Accepted?
If compulsory fees at Hormuz become accepted, other coastal states may try to follow the same model. They could argue that naval patrols, anti-piracy operations, environmental protection, or traffic management justify charging ships for passage.
This could affect several major trade routes:
- Bab el-Mandeb: Located between Yemen and the Horn of Africa, it connects the Red Sea with the Gulf of Aden and carries traffic moving toward the Suez Canal.
- Strait of Malacca: Running between Malaysia, Singapore, and Indonesia, it is one of the main routes linking Asia with the Middle East and Europe.
- Strait of Gibraltar: Located between Spain and Morocco, it connects the Atlantic Ocean with the Mediterranean Sea.
- Danish Straits: These passages connect the Baltic Sea with the North Sea and support trade between Northern Europe and global markets.
- Lombok Strait: Located between the Indonesian islands of Bali and Lombok, it provides a deeper alternative to the Strait of Malacca.
- Sunda Strait: Situated between Java and Sumatra, it connects the Java Sea with the Indian Ocean.
- Mozambique Channel: Located between Mozambique and Madagascar, it is an important route for ships travelling around southern Africa.
- English Channel: Separating the United Kingdom from France, it is one of the busiest shipping routes between the Atlantic and Northern Europe.
- Bosphorus and the Turkish Straits: The Bosphorus and Dardanelles connect the Black Sea with the Mediterranean and carry major flows of grain, energy, and other commodities.
Could Protection Fees Create a Dangerous Incentive?
Protection fees could create a conflict of interest. A country providing security may also benefit financially from continued tension, higher risk levels, or greater dependence on its military presence.
It may also encourage governments to exaggerate threats or pressure vessels into paying. In the worst case, shipping companies could end up paying for protection from the same instability that created the danger.
The Global Economic Impact of Strait Fees
Any new charge at the Strait of Hormuz would spread far beyond the ships using the route. Higher transport costs would move through energy markets, commodity prices, insurance, and global supply chains. Even the threat of fees could increase uncertainty and push companies to prepare for disruption.
Impact on Global Oil and Gas Prices
The Strait of Hormuz is one of the world’s most important routes for oil and LNG exports. New fees would increase the cost of moving energy from the Gulf to global markets.
Oil and gas prices could rise as traders price in higher shipping costs and supply risks. Import-dependent countries may then face more expensive fuel, electricity, and industrial production.
The Wider Commodity Impact
The effects would not stop with crude oil and natural gas. The strait also supports trade in refined fuels, petrochemicals, fertilizers, aluminum, and other industrial materials.
Higher transport costs could reach agriculture and manufacturing. More expensive fertilizers may raise food production costs, while higher chemical and energy prices could pressure factories and consumers.
Impact on Shipping, Insurance and Supply Chains
Shipping companies would likely face higher war-risk premiums, security expenses, crew costs, and freight rates. Some vessels may also delay journeys or avoid the region during periods of tension.
These costs would eventually reach importers and consumers. Delivery delays, contract disputes, and limited tanker availability could also disrupt supply chains long before the strait is formally closed.
Which Countries Would Be Most Exposed?
Asian importers would face the greatest pressure. China, India, Japan, and South Korea rely heavily on energy shipments from the Gulf. Higher transit costs could quickly increase their oil and LNG import bills.
Gulf exporters would also be directly affected. Saudi Arabia, the UAE, Qatar, Kuwait, Iraq, and Bahrain depend on the route to reach global markets. Some have pipeline alternatives, but these cannot replace all maritime exports.
Europe may face higher LNG prices and stronger competition for alternative supplies. Even countries with limited direct exposure to Hormuz could still feel the effects through higher fuel, shipping, and manufacturing costs.
Developing economies may face the most serious financial pressure. Higher energy prices can increase inflation, weaken local currencies, widen trade deficits, and raise the cost of fuel subsidies.
Conclusion: More Than a Shipping Fee
Charging ships to pass through Hormuz would affect far more than one waterway. It could weaken long-standing maritime rules, raise global trade costs, and encourage similar demands across other strategic routes. The real risk is a less predictable system where access to major straits depends on military power, political pressure, and payment.