Earlier this week, Iran rejected a 15-point cease-fire proposal put forward by the US and instead laid out five conditions for ending the war that the US and Israel started in late February. The official noted that the five conditions are in addition to the demands Tehran made during talks with Washington, days before the barrage of missiles hit it.
One of those conditions was recognition of Iran’s sovereignty over the Strait of Hormuz, a condition Tehran had never made before. According to a CNN report, the narrow waterway, which is responsible for transporting roughly a fifth of the world’s oil and liquefied natural gas (LNG), has now emerged as a powerful weapon for the Islamic Republic. Tehran is now using this weapon to generate potentially billions of dollars in revenue and create a pressure point on the global economy.
Iran to charge vessels to sail through Strait of Hormuz?
In his first speech, Iran’s new Supreme Leader Mojtaba Khamenei stressed that the leverage effect of blocking the strait must continue. The Islamic Republic now suggests that this Hormuz influence can be formalized. Lawmakers are now considering introducing legislation that would require nations using the Strait of Hormuz to transport fuel and goods to pay tolls.
In addition, an adviser to Mojtaba Khamenei proposes a “new regime for the Strait of Hormuz” once the war ends. Reports suggest that under such a system, Tehran could impose restrictions on rival states, effectively linking access to one of the world’s most important sea lanes with its wider geopolitical disputes.
How can Iran benefit from the Strait of Hormuz?
If the toll system is implemented, Tehran could make millions a day. According to the report, nearly 20 million barrels of oil and petroleum products are transported through the strait every day. If the Islamic Republic decides to go ahead with its previously reported fees of $2 million per tanker, that would amount to $20 million a day or nearly $600 million a month in oil alone. And if LNG supplies are included, that number is expected to be higher than $800 million per month.
Once in place, the toll system could also assert Tehran’s dominance, potentially reducing attacks on the Islamic Republic as a result. After the war with the US and the closure of the strait, Tehran sent a subtle message to the world about its hold on one of the key waterways and what would happen if Tehran decided to close it.
The Strait of Hormuz has closed
Days after Tehran was attacked by Washington and Tel Aviv, the Islamic Revolutionary Guard Corps (IRGC) announced the closure of the Strait of Hormuz. The Islamic Republic has long threatened to close the arterial waterway in response to the attack; however, few expected that it would act, or that the impact on world trade would be so severe. The scale of the disruption now appears to be influencing Tehran’s approach, with its latest demands suggesting an attempt to turn this moment of leverage into a more permanent strategic advantage.
Amid the Iranian attacks, shipping through the strait has slowed to a near halt, a move that has thrown global energy markets into chaos and forced nations far beyond the Persian Gulf to take emergency measures to secure fuel supplies.
The Hormuz strategy has proven itself: Expert
Dina Esfandiary, head of the Middle East at Bloomberg Economics, told CNN: “Iran has been a bit taken aback by how successful its (Hormuz) strategy has been — how cheap and relatively easy it is to hold the global economy hostage.” She added that one of the lessons Tehran has learned in this war is that it has discovered a new lever of Hormuz and will likely use it again in the future.
The US is concerned about a possible toll system in Hormuz
Earlier on Friday, US Secretary of State Marco Rubio warned at a meeting of G7 leaders that one of the immediate challenges after the war with Iran will be the country’s attempt to establish a toll system in Hormuz. After the G7 meeting in France, Rubio said the toll system was not only illegal but unacceptable, adding that it was dangerous for the world. He noted that it is important for the world to have a plan to counter it. In addition, the G7 foreign ministers stressed the “absolute necessity” to restore “safe and free freedom of navigation”.
