Is Iran Going to Make Hormuz a Revenue Source?

This time Iran has resorted to the strategic approach for earning revenue from the Straits by making all the Gulf states a party to this initiative instead of gaining it alone. In this connection, Iranian officials have clearly stated that they want their Persian Gulf neighbours to be part of the agreement and share the revenue. As media reported, Iran’s chief negotiator has already visited Oman and discussed the proposed arrangements with its neighbours across the waterway. In this connection, he has said, “Everyone needs to know that management of the strait will never return to the way it was before.” However, the USA has vehemently opposed this idea, as Secretary of State Marco Rubio, while on a Middle East trip, has pushed back on the idea, saying that tolls or fees would set a dangerous precedent that would spread like a contagion and cause chaos. In this connection, he has said, “The reality is that no country on earth has the right to charge for the use of international waterways, and that will never be an acceptable condition of any deal.” He further added that Persian Gulf countries had rejected the idea of charges to cross the straits.

As reported in the media, Iran has been trying to take this idea from similar models being followed around the world. One of such examples is the Dardanelles, where Turkey charges ships a tax what is known as the 'gold franc' for passing through the Aegean Sea of the international waterway. Iran is also reportedly reviewing another model used in the Strait of Malacca, which has close similarity with the Strait of Hormuz because this strait is also one of the main global energy checkpoints and shares a border with more than one country. The cost of Malacca patrol is shared among the Asian countries along with a private Japanese foundation. Keeping this in view, Iran has already set up an insurance company which the shippers must use to cross the Strait. The Iranian authority has warned that the ships passing outside its designated routes would be highly dangerous and, as such, prohibited.

The initiative Iran has undertaken is not going to be an easy exercise, as they will have to face strong opposition from many countries, including their neighbours. According to media reports, the US, Oman and other Persian Gulf states have already said that the strait should remain free of any toll or fee. US President Donald Trump has mentioned in his social media post, “There are no tolls, no insurance costs & no other charges of any kind being sought or received by Iran on ships travelling the Strait of Hormuz.” Even the United Arab Emirates (UAE) has also opposed the idea, as one high official has said to the media that new geopolitical realities, such as in the Strait of Hormuz, cannot be imposed on the Arab Gulf states.

Additionally, Iran will have to go through some major hurdles and impediments if they really decide to make money from the Strait of Hormuz. Iran has been the signatory of international and regional agreements, which bar them from unilaterally imposing fees or charges on ships passing through the strait. Any service charge levied by Iran will require formal approval from all member states of the International Maritime Organisation, which would be an almost impossible task. Additionally, any service charge, if realised from ships passing through the straits, would be required to be managed by a regional body on behalf of Iran and other participating countries.

The Strait of Hormuz, which once turned into the central battleground of the war between Iran and the US, has now become the key bargaining point towards ending the war. The analysts and political critics allege that Iran has suffered irreparable losses from the war, but they have also learnt some key lessons as well, of which manoeuvring the critical global trade route, the Strait of Hormuz, is one. They have learnt and are well prepared to pose a threat if necessary to shipping oil through this route. Iran has reopened this waterway after the US lifted its blockade of Iranian ports as a part of the deal signed on 14 June 2024. Soon after reopening the Hormuz, Iran introduced a new procedure that requires the ships to register two days ahead of crossing the strait. The way war has ended and the subsequent development is taking place, it is apparent that Iran may move ahead with its plan of earning revenue from this crucial waterway. Whether the Strait of Hormuz will turn into a good revenue source for Iran or will be a new cause of regional conflict remains to be seen in the future.