FRANKFURT, Germany (AP) — Iran is demanding the right to levy tolls on the Strait of Hormuz as a precondition for reopening the waterway, vital to world oil supplies, in order to end its war with the United States and Israel.
However, collecting tolls in the strait would violate a fundamental and enduring principle of international maritime trade: freedom of peaceful navigation. This is an old idea that was implemented in 1994 through the United Nations Convention.
Opening the strait would protect the global economy from supply disruptions that have caused energy and fertilizer prices to rise sharply since the war began on February 28. But agreeing to Iranian toll collection would strengthen the Islamic Republic’s control of the strait, which carries 20% of the world’s oil — and enrich the country that started the war.
US President Donald Trump has prioritized opening the strait. But the White House said Wednesday it opposes the tolls, and analysts said Gulf oil producers are too.
Analysts say they have seen no change in traffic through the strait since the ceasefire was announced, despite White House claims to the contrary.
Here are things to know about Iran’s proposal and the international law it conflicts with.
Iran had already begun charging ships passing through the strait
After the US and Israel went to war, Iran quickly used attacks on submarines – and threats of attacks – to gain leverage by blocking the strait, making the passage far more dangerous. The disruption created immediate shortages in some Asian countries heavily dependent on the region’s energy, drove up gasoline prices in the US and Europe, and threatened global economic growth.
Iran then began inspecting ships in a murky scheme dubbed “tollbooths” by shipping analysts.
The ships were told to divert between the straits in Iranian and Omani territorial waters and go around Iran’s Larak Island. After providing detailed crew and cargo information to mediators from Iran’s paramilitary Islamic Revolutionary Guard Corps, some ships were allowed to proceed — and at least two reportedly paid the equivalent of $2 million in Chinese yuan.
Law of the Sea treaties guarantee passage to peaceful ships
Iran’s 10-point proposal to end the war includes a provision allowing it and Oman to charge ships passing through the Strait of Hormuz, a regional official said on condition of anonymity to discuss the talks in which they are directly involved. The official said Iran will use the money raised for reconstruction.
But Article 17 of the Law of the Sea Treaties guarantees the right of “innocent passage” for ships that do not threaten coastal states. So allowing Iran and Oman to launch a charge to pass through the strait would set a dangerous precedent, experts said.
“Freedom of navigation in the world’s seas has been a fundamental right for hundreds of years, based on the notion that the sea belongs to no one,” said Philippe Delebecq, a professor at the Sorbonne University in Paris and an expert on maritime law.
“Freedom of navigation has always been recognized, especially in the straits,” he said. The concern is that if the Strait of Hormuz can be closed, why not the Strait of Gibraltar between the Mediterranean and the Atlantic, or the Strait of Malacca in Indonesia?
He called that scenario “the end of international society.”
Neither Iran nor the US has ratified the Law of the Sea Treaty
While 172 countries have ratified the UN Convention, Iran and the United States have not.
“Not ratifying the convention does not give (Iran) complete freedom of action in the Strait of Hormuz,” said Julien Renaut, head of the French Association of Maritime Law, a trade group. “It remains subject to international law and in particular the customary right to adopt it.”
An Iranian tollbooth could lead China to conclude it could restrict traffic through the Taiwan Strait, Renaut said.
Oman and Iran may face diplomatic pressure to comply with the convention, said Constantinos Yillourides, senior research fellow at the British Institute of International and Comparative Law.
Free travel “is in everyone’s interest,” he said. “We all want to get the best products at the best prices.”
The global economy needs to reopen the Strait of Hormuz
Some economists say that, from a strictly economic perspective, the world will see only additional costs from any tolling in the Strait of Hormuz.
For example, a $2 million toll on a large tanker carrying two million barrels of oil is a $1 per barrel increase in that ship’s oil.
“The burden falls not on global consumers, but on Gulf states that supply oil transiting the strait,” wrote the Brussels-based Bruegel think tank. The global economy would immediately benefit from this reopening of the Straits – putting 20% of the world’s oil back on the market and sending prices lower.
Also, by lowering oil prices, it would eliminate a multibillion-dollar geopolitical windfall for Russia, whose oil is suddenly in high demand despite sanctions.
The international price of oil rose from around $72 a barrel before the war to $118 on March 31. The price of international benchmark Brent crude fell sharply to $94.55 on Monday after news of a two-week ceasefire.
Gulf oil producers are frustrated by Iran’s control of the straits
Saudi Arabia, the biggest gulf producer, welcomed the ceasefire agreement between the US and Iran but called for the Strait of Hormuz to remain open “without any restrictions”.
Gulf countries have had to shut down about 12 million barrels per day in crude production because there is no viable route around the strait for much of their oil. The two pipelines that bypass it are not enough to make up for all the lost oil, and building new pipelines will take years.
Given the downside of the tollbooth proposal, Gulf states will only agree to it if all other options look too bad, Bruegel said.
A major objection in the West is that the toll would benefit the Islamic Revolutionary Guard Corps, which is responsible for Iran’s ballistic missile program, suppresses domestic political opposition, and is listed as a terrorist organization by the US and the European Union.
___
Reported from Leicester Parish. Michael Bieseker in Washington contributed to this report.
