Iran and Oman Advance Plans to Toll the Strait of Hormuz: What It Means for Global Trade

In a move that threatens to fundamentally alter the economics of global energy, Iran and Oman have formally announced a joint working group to implement "associated costs" for commercial vessels transiting the Strait of Hormuz.

The joint statement, released following high-level diplomatic meetings in Muscat between Iranian and Omani officials, marks a critical escalation in the battle over who controls the world's most vital maritime chokepoint. While both nations emphasized their sovereign rights over their respective territorial waters, the prospect of a mandatory tolling arrangement has sent immediate shockwaves through global commodities markets and the international shipping industry.[1][4]

The stakes surrounding the Strait of Hormuz are difficult to overstate. The narrow waterway, which separates the Persian Gulf from the Gulf of Oman and the Arabian Sea, serves as the primary artery for Middle Eastern energy exports. Roughly 20 percent of the world's total crude oil and liquefied natural gas (LNG) supply passes through this corridor daily.

Any friction, delay, or added cost applied to this volume of traffic cascades directly into global energy prices, affecting everything from the cost of gasoline at American pumps to the price of heating homes in Europe and powering factories in Asia.[1]

The push for a tolling system emerges in the immediate aftermath of a fragile Memorandum of Understanding (MoU) signed between the United States and Iran. The agreement, which recently ended a period of intense conflict and a de facto blockade of the strait, established a temporary 60-day window of toll-free transit.

However, the MoU also explicitly acknowledged that Iran would conduct dialogue with Oman and other Gulf littoral states to define the "future administration and maritime services" of the waterway. Tehran is now aggressively moving to define those services on its own terms before the 60-day clock expires.[2][3]

Iran has wasted no time in building the bureaucratic infrastructure required to monetize the strait. The government in Tehran recently enacted laws establishing the "Persian Gulf Strait Authority," a dedicated body operating under the supervision of the Supreme National Security Council. This authority is tasked with overseeing the administration of the waterway and, crucially, collecting the newly proposed revenues. Iranian officials have framed this not as a hostile act, but as a necessary measure to fund environmental protection, maintain maritime safety, and generate revenue for post-war reconstruction.[3][5]

The financial burden proposed by Tehran is unprecedented for a natural international waterway. Iranian parliamentary officials have publicly floated transit fees averaging between $1.5 million and $2 million per vessel crossing. For a fully loaded Very Large Crude Carrier (VLCC) carrying two million barrels of oil, a $2 million toll adds roughly one dollar to the cost of every barrel. While major oil companies and state-backed energy importers could technically absorb this cost, the aggregate macroeconomic effect would act as a massive, sudden tax on the global economy.[3][5]

In a highly unusual twist designed to circumvent Western financial systems, Iran has outlined a flexible, multi-tiered payment structure for the proposed tolls. Recognizing that heavy US sanctions restrict its access to the traditional dollar-based banking system, Iranian officials have confirmed that the Persian Gulf Strait Authority will accept payments in cash, cryptocurrency—specifically the US dollar-pegged stablecoin Tether—and even through direct barter arrangements. Under the barter model, vessels could theoretically settle their transit debts by delivering specific goods or services directly to Iranian ports.[5]

Oman’s participation in the joint working group places the Gulf sultanate in an incredibly delicate diplomatic position. Oman shares the strait with Iran, and the recognized international shipping lanes actually pass through Omani territorial waters. Historically, Muscat has maintained a strictly neutral stance, frequently serving as a quiet mediator between Tehran and Washington.

By signing the joint statement to study the "costs associated" with navigation, Oman is attempting to assert its own sovereign rights while simultaneously trying to moderate Iran's more aggressive tolling ambitions. Omani officials have publicly stressed their commitment to "toll-free safe passage," suggesting a deep internal tension within the working group.[4]

The Trump administration has reacted to the tolling plan with fierce and immediate opposition. Viewing any mandatory fee as a direct violation of the freedom of navigation, US officials have launched a pressure campaign to kill the initiative before it takes root.

President Donald Trump has issued stark warnings, threatening severe military consequences if Oman attempts to control the waterway alongside Iran. The administration views the tolling scheme not as a legitimate maritime service fee, but as a thinly veiled extortion racket designed to fund the Iranian state at the expense of the global economy.[4]

Beyond military threats, the United States is weaponizing its economic arsenal to deter compliance. US Treasury Secretary Scott Bessent has explicitly threatened to impose secondary sanctions on Muscat if the Omani government facilitates or helps impose the tolling system.

This places Oman in a geopolitical vice: cooperate with its powerful neighbor Iran and face devastating US sanctions, or reject the tolling plan and risk Iranian retaliation in its shared territorial waters. The US is also leaning heavily on its allies, particularly the United Kingdom, to present a unified front against normalizing any fee structure.[4]

At the heart of the dispute is a complex and highly consequential debate over international maritime law. Under the United Nations Convention on the Law of the Sea (UNCLOS), ships of all nations enjoy the fundamental right of "transit passage" through straits used for international navigation.

This long-standing legal principle generally prohibits coastal states from levying tolls or taxes simply for the right of continuous and expeditious transit. Legal experts and maritime associations argue that allowing Iran to unilaterally toll the Strait of Hormuz would upend decades of established international trade precedent, effectively closing the open seas to free commerce and holding the global economy hostage to regional political disputes.

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However, international law does contain a narrow loophole that Iran is attempting to exploit. Coastal states are permitted to charge fees for specific, tangible services rendered to a ship, such as pilotage through hazardous areas, search and rescue readiness, lighthouse maintenance, or environmental protection measures. By framing the $2 million charge as a "maritime service fee" rather than a toll, Tehran is attempting to provide a veneer of legal legitimacy to its revenue-generation scheme.[2]

Iran is not without precedent in charging for passage through restricted waters, though the scale is vastly different. Turkey, for example, legally charges navigation and safety fees for commercial ships passing through the Bosporus and Dardanelles straits. Last year, Turkey increased these fees by 15 percent to $5.83 per net ton, generating hundreds of millions of dollars annually to maintain lighthouses and traffic management services. Iran points to the Turkish model as justification, though the proposed Hormuz fees are exponentially higher than the costs associated with the Turkish straits.[3]

The global shipping industry is watching the negotiations with mounting alarm. Industry groups warn that if Iran successfully normalizes a toll in the Strait of Hormuz, it will set a dangerous precedent that could rapidly spread to other vital maritime chokepoints. If the principle of free transit is broken, coastal states bordering the Strait of Malacca, the Bab el-Mandeb, or the English Channel could theoretically introduce their own "service fees," fundamentally altering the cost structure of globalized trade and logistics.[3]

As the 60-day toll-free window established by the US-Iran memorandum ticks down, the window for a diplomatic resolution is closing. If Iran moves to actively enforce the $2 million transit fees, shipowners will be forced to choose between paying the controversial tolls, risking seizure by Iranian naval forces, or halting transits altogether. Any of those outcomes promises to inject massive volatility into global energy markets, threatening to reignite inflation and derail economic growth just as central banks worldwide attempt to stabilize the post-crisis economy.[2][4]