Strait of Hormuz Fee Plan Would Hike Shipping Costs by 5-7% of Cargo Value

For supply chain professionals, the Strait of Hormuz has always been the world’s most critical chokepoint—and the latest attempt by Iran and Oman to extract a 5-7% fee on passing cargo threatens to inject unprecedented cost and compliance risk into every crude oil, LNG, and container shipment that moves through the Gulf. With one-fifth of global oil supply transiting these waters daily, the margin hit and insurance nightmare would reverberate from procurement desks in Rotterdam to factory floors in Shanghai.

The Strait of Hormuz, the narrow chokepoint between the Persian Gulf and the Gulf of Oman, is once again at the center of geopolitical tension and supply chain vulnerability. A proposed deal between Iran and Oman to grant Tehran control over inbound traffic and to impose mandatory transit fees has been met with swift rejection from the global shipping industry, which warns that the arrangement is both unworkable under current sanctions regimes and a dangerous precedent for international maritime law.

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The Strait of Hormuz, the narrow chokepoint between the Persian Gulf and the Gulf of Oman, is once again at the center of geopolitical tension and supply chain vulnerability.

At the heart of the proposal, as described by a senior Iranian official, Iran would intervene in inbound vessel traffic and both nations would collect fees on cargo passing through the strait—Iran seeking 5% to 7% of a cargo’s value, Oman discussing around 3%, while Washington insists on no fees at all. Before the US-Israeli airstrikes at the end of February 2026 that unleashed war in Iran, the strait was freely open to all vessels and carried roughly one‑fifth of the world’s oil supplies as well as other essential commodities. The waterway’s status as an unimpeded international passage is enshrined in a traffic separation scheme adopted by the UN’s International Maritime Organization in 1968 with regional consent.

Four industry sources explicitly told Reuters that the plan is not feasible, primarily because of sweeping US sanctions and restrictive insurance clauses that would prevent shipowners, charterers, and financial intermediaries from making any payments to Iranian entities. Even if a fee were structured as a “service charge,” it would almost certainly fall foul of secondary sanctions, making vessels and their insurers liable to enforcement actions that could include vessel detention, loss of P&I cover, and blacklisting. The world’s leading shipping associations, in a sharply worded open letter to the IMO this week, called the proposal “a toll in all but name” and warned that compulsory charges would “undermine the internationally recognized legal framework governing straits used for international navigation and transit passage.”

For the shipping and logistics sectors, the implications are seismic. A de facto toll at the Strait of Hormuz—whether called a transit fee, clearance charge, or service levy—would instantly add a multi‑million‑dollar surcharge to every crude oil, LNG, and container shipment transiting the Gulf. With a single VLCC carrying up to 2 million barrels of crude worth over $120 million at today’s oil prices, a 5% fee would translate to $6 million in additional costs per voyage, costs that would cascade through the energy supply chain, eventually landing on consumers and industrial buyers worldwide. For container lines, the burden would be equally acute, squeezing margins at a time when freight rates remain under pressure. Insurance markets, already skittish over war risks in the region, would likely exclude cover for any vessel that complies with the fee, effectively locking responsible operators out of the strait.

The legal precedent is perhaps even more damaging. If Iran and Oman succeed in converting an international strait—one governed by the United Nations Convention on the Law of the Sea’s regime of transit passage—into a tolled waterway, other coastal states could cite the precedent to impose charges at chokepoints such as the Malacca Strait, Bab el‑Mandeb, or the Turkish Straits. The resulting fragmentation of the global commons would irreversibly raise shipping costs, lengthen voyage times, and embolden states to use maritime geography as a geopolitical weapon. The IMO, which historically mediates navigational safety and efficiency, now faces a political test it has not confronted since the Suez Crisis.