Iran demands control of Strait of Hormuz and signals possible transit tolls

Insights

• Iran has added recognition of sovereignty over the Strait of Hormuz to its list of demands to end the war.
• Recent Iranian attacks have sharply reduced shipping through the strait and disrupted global energy markets.
• Iranian officials and lawmakers are proposing a new transit regime and the possibility of charging fees for passage.
• Iran has set up vessel registration and some ships appear to be using a new corridor with reported payments to secure passage.
• Charging transit fees in an international strait would conflict with widely accepted rules of transit passage under customary international law.
• If implemented, tolls on oil and LNG could generate hundreds of millions of dollars per month, comparable to typical Suez Canal revenues.
• The United States, G7 ministers, and maritime law experts have warned against any tolling system and called for free and safe navigation.