Iran's grip on Hormuz tightens with new 'toll' system for 20% of world oil

(P1 - Lede) Iran is consolidating control over the Strait of Hormuz, the channel for about a fifth of the world’s oil, by rolling out a complex system of diplomatic deals, rigorous vetting, and alleged fees for passage that has throttled traffic and created a tense new reality for global energy markets.

(P2 - Authority) "The straits will be blocked or opened up only by the approval of the Iranian regime," said Danny Citrinowicz, a former Israeli intelligence officer and now a senior researcher at Israel’s Institute for National Security Studies. "Some will get through because of political alliances, others will have to pay, others will be turned back. This is the new norm.”

(P3 - Details) The new mechanism has choked vessel traffic to a trickle, with fewer than 60 ships transiting between April 18 and May 6, a stark drop from the pre-war average of 120 to 140 ships daily. The disruption has trapped an estimated 1,500 vessels in the Gulf and sent oil prices on a volatile ride, with Brent crude falling over 5 percent to around $104 a barrel on Wednesday following comments from U.S. President Donald Trump that talks were in their "final stages," only to rebound over $106 on Thursday as the market weighed the facts on the ground.

(P4 - Nut Graf) With Iran’s Islamic Revolutionary Guard Corps (IRGC) in de facto control, the world economy faces a daily bleed of over $120 billion in lost oil and gas revenue. Shippers are now navigating a treacherous choice: remain indefinitely blockaded, or engage with Iran’s new system, a move that risks violating U.S. sanctions and losing insurance coverage. The U.S. Treasury has explicitly warned against making payments, while the U.S. Navy maintains its own blockade on Iranian ships outside the strait, creating a multi-layered geopolitical standoff.

The Price of Passage

While direct payments are officially denied and legally perilous due to sanctions, two European shipping sources told Reuters that some vessels are paying Iranian authorities upwards of $150,000 to secure safe passage. Other reports cite fees as high as $2 million per ship. Iran, which recently established a “Persian Gulf Strait Authority,” maintains it can charge for services like security and navigation, though international law typically bars tolls for transit through natural straits.

The journey of the Agios Fanourios I, a 330-metre-long tanker carrying 2 million barrels of Iraqi crude to Vietnam, illustrates the complexity. After being stuck for weeks, the vessel set off May 10 following a direct government-to-government deal between Iraq and Iran. Even with this high-level clearance, the tanker was briefly stopped by IRGC speedboats near Hormuz Island, turning a typical five-hour transit into a two-day ordeal before it was ensnared for another six days by the U.S. Navy's own blockade.

A Tiered System

Iran's new system appears to be tiered, prioritizing ships from allies like Russia and China, followed by countries with close ties like India and Pakistan. For others, direct government-to-government arrangements are the primary route.

India, which relies on Hormuz for a significant portion of its energy imports, has its embassy in Tehran liaise directly with Iranian authorities, including the IRGC. Indian ship captains are given specific routes and instructed to turn off transponders. So far, 13 Indian-flagged vessels have cleared the strait using this method, while another 13 remain stranded.

Despite President Trump's assertion that the U.S. has "100% effective" control of the strait and that the conflict could end "very quickly," the reality on the water is one of Iranian dominance. For the global economy and the 22,500 sailors trapped in the Gulf, the standoff is far from over. As ING analysts noted, "We’ve been in this situation multiple times before, which ultimately led to disappointment."

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