Hormuz Toll: Impact on Iran & Oil Prices

Introduction
Around mid‑March 2026, Iran floated the possibility of imposing what has widely been described as a 10% oil levy on shipments passing through the Strait of Hormuz. Iranian and regional media first reported that parliament was examining such fees, and the story quickly spread across Western outlets,including Reuters and others. On 18 March, lawmaker Somayeh Rafiei stated that the Iranian parliament is reviewing a proposal to charge tolls and taxes on vessels using Hormuz as a “secure route” for energy and other goods, at a moment of sharply rising tensions between the US, Israel, and Iran.

Why is Iran proposing this and what does it mean for their government?
Iran’s proposal is not entirely without precedent, since several major maritime chokepoints already apply transit dues and service fees, even if they do not usually take the form of a 10% tax on oil value. Egypt, for example, charges Suez Canal tolls based on Suez Canal Net Tonnage and, in recent years, has added surcharges of about 25% on normal dues for laden crude tankers and 15% for empty ones. Türkiye’s authorities apply transit fees in the Bosphorus and Dardanelles, where oil tankers face a base passage charge of roughly 5.83 US dollars per relevant net ton plus compulsory pilotage and towage, adding up to high costs per transit for large tankers. In this context, Iranian lawmaker Alaeddin Boroujerdi has portrayed the potential Hormuz toll as a “new concept of sovereignty,” signaling Tehran’s intent to monetise its strategic position.

Legal complications, however, distinguish Hormuz from Suez and the Turkish Straits. Article 42(2) of the United Nations Convention on the Law of the Sea (UNCLOS) bars states from imposing tolls or charges on transit passage through international straits, except for fees tied to specific services such as pilotage or navigation aids. Egypt’s Suez Canal is an internal man‑made waterway under full Egyptian sovereignty, while the Turkish Straits are governed by the Montreux Convention, a special treaty regime preserved by UNCLOS, both of which allow their fee systems. By contrast, the Strait of Hormuz is a natural international strait: its main channels lie within the territorial seas of Iran and Oman, but foreign ships benefit from a non‑suspendable right of transit passage under the UNCLOS framework.

Iranian lawmakers are aware of this, and have therefore framed emerging charges as payments for “safe passage” and security, rather than as a simple transit tax. Reports indicate that some “friendly” vessels have already paid around 2 million US dollars each for what Iran describes as selective safe‑passage arrangements through Iranian‑controlled corridors. Commentators and social‑media analyses suggest that, in a highly optimistic scenario where Tehran could effectively collect a 10% levy on the value of all oil and gas passing Hormuz under normal conditions, annual revenue might reach on the order of 70 billion US dollars, roughly 15–18% of Iran’s estimated 400-450 billion‑dollar GDP. More realistic projections based on today’s limited $2‑million‑per‑tanker practice, instead, point to revenues in the low single‑digit billions at most, less than 1% of GDP but still a meaningful inflow for a heavily sanctioned economy.

How will the world’s oil prices be affected
Amid the current war in the Middle East, oil prices have already become highly unstable, with the conflict around Hormuz pushing Brent crude above 100-110 US dollars per barrel and back towards the levels seen during the 2022 Ukraine‑related spike. Iran’s closure of the strait to “enemy” ships, coupled with talk of new tolls, has raised fears that global prices could remain elevated for an extended period. Analysts argue that if a toll regime on oil passing through Hormuz were implemented and broadly enforced, it would add to shipping and insurance costs, likely embedding a risk premium of around 10–20 dollars per barrel in the short to medium term. Some scenario studies suggest that prolonged disruption could push prices towards 140 dollars per barrel and, in the long run, contribute to an increase of roughly 1% to global inflation, with major importers such as China and India particularly exposed unless they receive exemptions or preferential terms.

Conclusion
If Iran can sustain and expand its proposed passage fees, the government could secure an important new revenue stream while using Hormuz as a strategic tool in the ongoing conflict. Even in more modest forms, tolls and “safe passage” charges strengthen Tehran’s leverage over energy markets and regional rivals. At the same time, the combination of legal controversy, security risks, and higher transport costs is likely to keep global oil prices elevated and volatile, making the broader economic outlook for both Iran and the world harder to predict as the crisis unfolds.