Tehran: Iran is reportedly planning to charge oil tankers a transit fee of $1 per barrel for passing through the strategically crucial Strait of Hormuz, a move that could further strain global energy markets already unsettled by conflict in the Middle East.
According to reports, Tehran is considering the toll during a temporary ceasefire period linked to ongoing tensions involving the United States and regional conflicts. The proposal would require ships to submit cargo details to Iranian authorities and undergo inspections before being cleared for transit through the narrow waterway.
Officials associated with Iran’s oil export sector indicated that the toll could be calculated based on the volume of crude carried by each tanker. Some reports also suggest payments could be demanded in cryptocurrency, possibly as a way to bypass international financial sanctions, reported NDTV.
Iran’s deputy foreign minister Kazem Gharibabdi said last week that Tehran was drafting a protocol with Oman to require ships to obtain permits and licences to pass the Strait, according to a Reuters report.
Here’s what Iran is demanding:
- Advance information of cargo and vessel details over the email
- Transit permission routed through Iranian authorities
- Payments set in advance, in Bitcoin or Chinese yuan
- Use of a northerly corridor close to Iran’s coast, between Qeshm and Larak islands
- Friendly cargo passes easier; others face delays or denial
But why payments in Yuan or Crypto?
According to various media reports, Iran is under heavy US and European sanctions. Dollar payments are difficult therefore. On the other hand, Crypto is harder to trace. Yuan settlements curtail exposure to Western banking rails, experts claim. Regional officials, as cited in an NDTV report, claim transactions have already begun in Yuan.
Can Iran impose such fees despite being opposed by other countries?
Any military endeavour to keep the Strait open would likely involve a major prolonged ground operation. Such operation will have to be conducted along a mountainous coast against well-entrenched Iranian forces, who are able to target vessels from far inland.
China on the other hand has strong ties with Iran. It is also the biggest importer of energy shipped through the Strait. Thus, Beijing could have more influence than other countries.
What does international law says?
The UNCLOS maritime convention governing international sea law, according to Reuters, states bordering straits cannot demand payment simply for permission to pass through.
However, they can impose limited fees on ships for specific services. Such services include piloting, tugging or port services. But these may not be levied more heavily on vessels from any particular countries.
Do any other internation waterway already charges fee?
Canals that have been dug up and not occurred naturally are treated differently to straits.
Egypt and Panama can charge fees to pass through the Suez Canal and the Panama Canal.
The Turkish straits – the Bosphorus, Sea of Marmara and the Dardanelles between the Black Sea and Mediterranean – are governed by the 1936 Montreux Convention. This guarantees free passage for merchant vessels when peace prevails.
The same convention allows Turkey to levy standardised charges to cover the cost of services. However, it does not allow Turkey to impose a general transit fee.
For transiting Singapore Strait, Singapore does not charge a fee.
