Iran to Charge Tolls for Strait of Hormuz Transit

Lead paragraph

Iran's parliament is drafting legislation to levy tolls on ships transiting the Strait of Hormuz, the semi-official Fars news agency reported on March 26, 2026, and Bloomberg subsequently picked up the story. The proposal would require vessels to pay a fee in exchange for security services provided during passage, formalising a practice Tehran says reflects its de facto control over parts of the waterway. The Strait of Hormuz continues to be a critical chokepoint: the International Energy Agency reported approximately 21 million barrels per day (mb/d) of crude and refined products passed through the strait in 2021, representing roughly 20%–21% of global oil consumption at that time. Market participants, insurers and flag states are already parsing the legal and commercial implications of a move that could raise transaction costs, alter routing economics and provoke diplomatic disputes. This article examines the context, the data, sector-level implications, and the risk calculus for shipping and energy markets.

Context

The draft bill, first reported by Fars and cited by Bloomberg on March 26, 2026, proposes a formal tolling mechanism tied to security provisions for transiting vessels. Tehran frames the move as a sovereign right to secure its territorial waters and to be compensated for escorting or guaranteeing safe passage; it comes against the backdrop of persistent tensions between Iran and a range of external navies operating in the Gulf. Historically, Iran has intermittently threatened to close the Strait or disrupt traffic in response to sanctions or military pressure; the new legislative approach would codify a revenue-generating alternative to coercive interruption. The legislative timeline is uncertain: Iranian parliamentary processes can be protracted, and any bill would still require executive approval and implementation guidelines that determine fee levels and enforcement mechanisms.

The legal environment is complex. Under the United Nations Convention on the Law of the Sea (UNCLOS), coastal states have limited ability to impede 'transit passage' through international straits, while retaining rights to regulate for safety and environmental protection. The proposed toll raises immediate questions about whether a fee would be classed as a permissible regulatory charge or as a de facto restriction on navigation. Several flag states and industry groups, notably the International Chamber of Shipping and major tanker insurers, will likely assert that any compulsory toll imposed unilaterally and tied to conditional security services contravenes accepted navigation norms. Diplomatic pushback could be expected from the United States, the European Union, and Gulf Arab states, who have routinely defended freedom of navigation through the strait.

Beyond legal arguments, Tehran's approach must be seen in domestic economic and strategic terms. Iran has faced chronic fiscal pressures from sanctions and macroeconomic instability — petroleum exports and transit fees represent a clear revenue opportunity if enforceable. The move could dovetail with broader Iranian goals of asserting leverage in regional diplomacy and extracting rent from global economic activity traversing its near-shore waters. How the bill details fees, exemptions, and enforcement will determine whether the policy is primarily symbolic bargaining leverage or a credible, revenue-producing regime.

Data Deep Dive

Traffic volumes through the Strait of Hormuz remained material in the last full-year estimates: the IEA documented about 21 mb/d of crude and refined products moving through the strait in 2021, a baseline often cited in market commentary. That figure is not static — trade flows shift with global demand, alternative pipeline usage, and regional production changes — but it highlights the strait's outsized role relative to other chokepoints. For perspective, global oil consumption hovered around 100 mb/d in the early 2020s, meaning flows through Hormuz accounted for roughly one-fifth of global demand. Any incremental cost applied to vessels would therefore be passed through to cargo economics and, depending on freight contract structures, to refiners and consumers.

Insurance and freight market data show sensitive pricing reactions to geopolitical risk in the Gulf. During acute tensions in 2019–2020, Gulf of Oman and Strait of Hormuz war risk premiums surged, with bunker fuel and freight rates for VLCCs (very large crude carriers) increasing materially for affected voyages. While exact premium figures vary with insurer models, market reports from those episodes indicate short-term increases in voyage costs of several percentage points, and in some cases tens of thousands of dollars extra per voyage. If a formal toll is introduced, it would join the suite of per-voyage operating costs insurers and owners already price in, but a predictable, statutory charge could be treated differently from episodic war-risk spikes.

Estimating potential revenue is illustrative but speculative. If 21 mb/d translates into the movement of crude on roughly 1,400 tankers per year (illustrative average; not a direct vessel count), and an illustrative toll of $50,000 per tanker transit were levied, annual gross receipts could exceed $70 million. A higher toll, or a fee structure tied to cargo volume, would scale receipts accordingly. These numbers are hypothetical and intended to show order of magnitude; actual vessel counts, fee structures, exemptions for flags or cargo types, and enforcement efficacy would determine realized revenues. Comparative data from maritime toll regimes, such as the Panama Canal, which generated several billion dollars annually in recent years, show that established toll systems can be significant state revenues when volume is both captive and high-value.

Sector Implications

For energy markets, the immediate effect of a credible toll depends on how it shifts marginal shipping costs and routing decisions. Small, predictable per-voyage fees are more likely to be absorbed into freight and refining economics, whereas substantial fees or fees perceived as a form of political rent could incentivise rerouting via longer passages or increased use of pipelines and land routes. For instance, a sustained material uplift in transit costs would improve the relative economics of Gulf producers using pipelines to the east (e.g., pipelines to the Arabian Sea) or reallocating cargoes to buyers closer to the Gulf. This would produce redistributional effects across producers and refiners rather than eliminating flows entirely.

Maritime insurers, charterers, and shipowners will need to model tolls into voyage calculations and charter-party negotiations. Contractual clauses such as 'barnacle clauses' (force majeure equivalents) or security-related pass-throughs could become standard if tolls are implemented and enforced. Insurance capacity in the Gulf has historically remained resilient, but persistent elevated costs can compress margins for owners and charterers and raise end-user prices in sensitive regions. Energy market participants will monitor freight forward curves and bunker pricing as secondary indicators of whether market participants expect tolls to persist.

Geopolitical peers and regional states will also respond. Gulf Arab states with alternative export routes — notably Saudi Arabia and the UAE — could leverage their infrastructure to offer lower-cost alternatives, effectively competing with any Iranian-imposed toll. Conversely, countries that rely heavily on Persian Gulf sea routes, including major Asian importers such as China, Japan and South Korea, may push for diplomatic solutions or enhance naval escorts, which in turn could change the security-to-fee calculus. The net sectoral impact will reflect both immediate cost adjustments and longer-run shifts in trading patterns.

Risk Assessment

Legal and enforcement risk is high. The international legal regime governing straits allows for transit passage; Tehran's attempt to monetize security could prompt legal challenges in international fora or unilateral non-compliance by flag states. Enforcement mechanisms on Iran's part would likely rely on coastguard activity and port-side interdictions, but heavy-handed enforcement risks escalation with naval consequences. Any maritime incident linked to enforcement would have outsized market and political repercussions, raising the probability of sanctions or coalition naval responses that would further complicate maritime insurance.

Market risk includes price volatility in oil and freight if perceptions of restricted or more costly access harden. Historical analogues show that even temporary closures or threats yield spikes in risk premia; a new, credible but non-violent toll regime could incrementally raise breakeven import costs for refined products and crude in certain routes. Credit and counterparty risk could increase for smaller owners and charterers if fee structures are retroactive or if large purchasers refuse to recognize the charge, creating disputes. Strategically, the toll could be used as leverage in broader negotiations over sanctions relief or regional security arrangements, introducing policy risk that is time-dependent and politically driven.

Operational risk for shipping companies and insurers includes compliance with any new paperwork, escrow mechanisms, or proof-of-payment requirements. Should Iran require advance payments or security deposits, logistics around port calls and bunkering will be affected, increasing voyage turnaround time and potentially reducing overall throughput. These practical frictions can compound into measurable cost overruns even when statutory fees are modest, especially for short-haul trades where per-tonne margins are thin.

Outlook

In the short term, expect diplomatic protest and market monitoring rather than immediate, wholesale changes to shipping patterns. Many owners will adopt a wait-and-see approach while flag states and insurers test the boundaries of compliance. Shipping companies tend to prefer legal predictability; if Iran publishes clear regulations with transparent fee schedules and a defined enforcement protocol, the market is more likely to price the toll as another operating cost rather than react with panic. Conversely, ambiguous implementation or aggressive enforcement would raise the likelihood of route deviations and insurance-driven surcharges.

Over a 12–24 month horizon, the real test will be enforcement consistency and international responses. If Tehran proceeds with modest fees and limited enforcement designed to extract rents without provoking naval confrontation, the policy could become a steady, if politically contentious, revenue stream. If Iran instead uses tolling selectively as leverage during periods of geopolitical friction, the toll would function more as a flashpoint that induces episodic volatility in freight and oil prices. Energy and shipping stakeholders should model both scenarios, distinguishing between a stable tariff regime and a politicised instrument of coercion.

Policymakers and market participants will also watch for secondary consequences: accelerated investment in pipeline capacity circumventing the strait, shifts in long-term charter-party terms that allocate security costs differently, and changes in insurance product design to reflect the new norm. For investors and corporates concerned with supply security, diversification of routes and supply baskets will become increasingly salient strategic decisions. For further background on geopolitical premium modeling and energy market impacts, readers can consult our prior coverage on regional shipping risk and oil price drivers at Geopolitical risk and oil and on maritime security implications at Shipping risk analytics.

Fazen Capital Perspective

Fazen Capital views the draft toll proposal as an instrument more valuable as geopolitical leverage than as a near-term fiscal bonanza. Tehran's primary constraint is enforcement credibility: to extract meaningful rents, Iran must reliably intercept and require fees from a wide set of flag states without triggering prohibitive naval pushback. That is a high bar. In a contrarian scenario, modest statutory fees could actually reduce episodic disruptions by providing Tehran a predictable, revenue-aligned channel that lowers incentives for sudden closures. Conversely, if the policy is implemented as an unpredictable, discretionary charge, it will likely increase risk premia and accelerate diversification away from Hormuz-dependent logistics — outcomes that are structurally disadvantageous to Iran's long-term economic interest. Investors and corporates should therefore parse not just whether a toll exists, but the operational modalities and enforcement record over the first 6–12 months.

FAQs

Q: Would a toll violate international law on transit passage?

A: The legality will hinge on how the toll is structured. Transit passage regimes under UNCLOS guard against unjustified impediments, but states retain regulatory rights for safety and environment. If a fee is framed as a safety or security service charge with transparent, non-discriminatory criteria, Iran will argue it is lawful; flag states may disagree, setting up potential legal disputes or diplomatic negotiations.

Q: How quickly could tolls affect oil prices?

A: If enforcement is immediate and broad, freight and insurance cost adjustments could be visible within days, and oil markets could price a risk premium within weeks. If implementation is gradual and predictable, the market effect will be incremental and largely reflected in freight margins rather than prompt spikes in spot crude.

Bottom Line

Iran's draft law to impose transit tolls at the Strait of Hormuz, reported March 26, 2026, elevates a regional lever into a potential recurring revenue and geopolitical instrument; the real economic impact will be determined by fee design and enforcement fidelity. Markets should prepare for increased pricing of maritime security risk, but the scale of disruption will depend on whether the toll becomes a stable tariff or a politicised tool.

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