Iran proposes collecting tolls or fees from ships passing through the Strait of Hormuz to generate up to $40 billion annually. According to discussions among Iran, Oman, and other regional players, Tehran has suggested charging for “security, safety, and environmental services.” The Iranian reading of other chokepoint fee schemes, however, is faulty. While Tehran cites precedent from fee schemes in Turkey’s Bosphorus and Dardanelles or the Malacca Strait, neither is relevant to the Strait of Hormuz. Simply put, Iran’s scheme is illegal under any reading of international law.

Simply put, Iran’s scheme is illegal under any reading of international law.
Consider Turkey’s fees: Turkey controls the Bosphorus and Dardanelles under the 1936 Montreux Convention Regarding the Regime of the Straits. This treaty guarantees freedom of passage for merchant ships during peacetime. Turkey does not levy a general transit tax; it only charges limited fees related to specific services like lighthouse support, rescue, towage, and health. Its fees cover service costs and are not arbitrary tolls.

The relatively small scope of Turkey’s revenue from its waterways also undermines the Iranian case. Data from Turkey’s Transport Ministry indicate that around 51,000 ships passed through the Bosphorus and Dardanelles in 2025 without stopping, generating about $227.4 million in fees. Twice as many ships transit the Strait of Hormuz, so for Iran to reach its revenue goal, it would need to charge 90 times the fee Turkey generates.

Likewise, charges for ships transiting the Strait of Malacca are minimal. Indonesia charges fees for pilotage or towing, while it and Malaysia and Singapore also charge small amounts to maintain navigational aids in the waterway.

Egypt charges fees in the Suez Canal, but the man-made canal and natural straits are not comparable. Ships pay tolls because the canal provides a commercial shortcut between the Mediterranean and Red Sea. Egypt controls the infrastructure, maintenance, traffic management, and access rules. The Suez Canal Authority charges vessels set fees according ship type, tonnage, cargo, and other commercial factors. In strong years, revenue from Suez reached about $10 billion before regional disruptions reduced earnings in 2024.

Hormuz operates under a stricter legal framework. Like the Bosphorus or Malacca, is a natural strait used for navigation between areas of the high seas or exclusive economic zones. Under the United Nations Convention on the Law of the Sea (UNCLOS) transit passage regime, vessels and aircraft can pass continuously and efficiently. Coastal states like Iran and Oman cannot impede or halt that passage, nor can they charge foreign ships simply for passing through.

Even if Tehran tried to impose a heterodox legal interpretation, it would likely be dead on arrival.
They can collect fees only for specific services rendered to a vessel, which they must apply without discrimination. Even though Iran has signed but not ratified UNCLOS, it cannot legally redefine freedom of navigation through international waters.

Even if Tehran tried to impose a heterodox legal interpretation, it would likely be dead on arrival. A Hormuz toll scheme would require cooperation from Oman and acceptance from Gulf Arab states, Asian energy buyers, insurers, shipowners, and naval powers.

The U.S. Navy has long defended freedom of navigation in the Gulf of Sidra, the Taiwan Strait, and, during the Reagan administration, the Strait of Hormuz as well. Any attempt to impose coercive tolls would lead to diplomatic retaliation, at a minimum, but also would likely lead to sanctions and military force.

If Iran proposes a narrow service-fee structure for traffic management, environmental protection, pilotage, emergency response, or maritime safety, it still would need to demonstrate transparent accounting, non-discrimination against other states, including Israel, and regional coordination. Iranian authorities, however, show neither the willingness nor the ability to be so transparent.

ABOUT AUTHOR

Dr. Umud Shokri  | Energy Strategist & Senior Visiting Fellow at George Mason University, U.S.