Iran pushes Strait of Hormuz tolls as Europe signals acceptance

European powers have privately accepted that some form of shipping fee through the Strait of Hormuz is inevitable, even as the US publicly opposes any monetization of the strategic waterway that carries about a fifth of the world's oil and liquefied natural gas supply.

Oman has submitted a formal proposal to the US and Western allies outlining a plan for shipping companies to pay service fees for using the strait, modeled on the Malacca Strait's voluntary fund mechanism, according to people familiar with the matter. Iran, however, insists the payments will be mandatory — not voluntary — and has warned vessels must follow Tehran-designated routes or face "an immediate and forceful response" from its armed forces.

"The economic benefits Iran could gain if US sanctions are lifted would be much greater than the revenue it could earn by charging ships to pass through the strait," a US official told Axios, describing Washington's message to Tehran as "think bigger." Secretary of State Marco Rubio underscored the US position during a visit to Bahrain last week, saying "there isn't a nation on Earth that supports having to pay money to go through the Strait."

The dispute over the strait's future has become one of the most explosive issues in US-Iran negotiations, which were paused this week as Iran prepares for the funeral of late Supreme Leader Ayatollah Ali Khamenei beginning July 4. Qatar, which is mediating the indirect talks alongside Pakistan, said both sides agreed to schedule the next round "as soon as possible" after the ceremonies conclude on July 9. The broader negotiations are operating under a 60-day memorandum of understanding signed in June that expires Aug. 18.

Europe's Quiet Shift

Several European governments have privately told Iranian and Omani officials they accept that some form of fee is unavoidable, though they have pressed for non-discriminatory treatment regardless of vessel flag, according to people familiar with the discussions. Some Gulf Arab officials hold similar views privately, though not necessarily as formal government policy, Bloomberg reported.

The European shift contrasts sharply with the US position. Rubio said the US wants to return the strait to its "pre-conflict status," a view echoed by Saudi Foreign Minister Prince Faisal bin Farhan, who said the waterway "must return to its pre-war condition." Bahrain's government said it has not accepted — and has not even been asked to accept — any fee or toll on transiting vessels.

Iran's Deputy Foreign Minister Kazem Gharibabadi said Tehran prefers to reach a joint management framework with Oman but will proceed independently if Muscat declines. "If Muscat chooses not to establish a joint framework for the future governance of the Strait of Hormuz, the Islamic Republic will proceed with implementing its own plan independently," he said after the two countries held the inaugural meeting of their joint committee on strait management Monday.

Recovery Remains Fragile

Commercial shipping through the strait has recovered to more than half of pre-war levels, with oil transit from Saudi Arabia and other Gulf producers exceeding 10 million barrels a day, according to shipping data. Iran's own crude exports have also risen since the blockade was lifted under the interim agreement.

But the recovery remains precarious. Last week, Iran struck a cargo vessel after the International Maritime Organization designated a safety route passing exclusively through Omani territorial waters. The IMO subsequently suspended its operation to evacuate hundreds of stranded vessels from the strait. Some ships continue to transit with their Automatic Identification Systems switched off, maritime industry publication The Maritime Executive reported.

International Maritime Organization Secretary General Arsenio Dominguez said mandatory transit fees or any system that impedes freedom of navigation through international waterways would violate international law, though a voluntary fund mechanism is feasible. He said he is discussing the Malacca Strait model with Omani officials and plans to explore options with member states.

For Iran, the semantics of the charge are secondary. "Whether you call it a transit fee, a security service fee or a maritime passage fee, no service in the world is free," Mehdi Mohammadi, a senior adviser to the Iranian government, said.

The last time a major maritime chokepoint faced a comparable governance challenge was in the Malacca Strait in the early 2000s, when littoral states established a voluntary fund mechanism that now collects about $20 million annually from user states and shipping companies. That model, which Iran and Oman have cited as a precedent, relies on voluntary contributions — a distinction that has become the central fault line in the current negotiations.

This article is for informational purposes only and does not constitute investment advice.