Synopsis: Massive volumes of oil and gas move through the Strait of Hormuz every day, making it one of the most important routes in global energy trade. Now, with Iran looking to charge transit fees, this key chokepoint could turn into a major source of income, potentially generating billions each year.
A temporary ceasefire in one of the world’s most critical oil routes is now on the verge of breaking down after high-stakes peace talks in Islamabad failed to produce a deal. With negotiations collapsing and tensions rising again, control over global energy flows is back in focus. At the center of it all is Iran, which now finds itself in a powerful position in global oil trade. As uncertainty grows and supply routes remain at risk, could this situation quietly turn into a massive financial opportunity for the country?
Why Hormuz Matters?
According to the International Energy Agency, the Strait of Hormuz is the primary export route for oil from major Gulf producers including Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, Bahrain, and Iran. In 2025, nearly 15 million barrels per day of crude oil passed through the Strait, accounting for about 34 percent of global trade, with China and India alone receiving 44 percent of these flows. Despite its importance, alternatives are extremely limited. Saudi Arabia and the UAE have pipelines to bypass the Strait, but their combined capacity of 3.5 to 5.5 million barrels per day is far from sufficient, and large-scale rerouting has not been tested.
The Strait is equally critical for natural gas. According to the IEA, almost all LNG exports from Qatar and the UAE pass through this route, except small volumes sent to Kuwait. In 2025, Qatar exported over 112 billion cubic meters of LNG, while the UAE added around 7 billion cubic meters, together accounting for nearly 20 percent of global LNG trade. Unlike oil, there are virtually no alternative routes. Qatar does send gas via the Dolphin pipeline to the UAE and Oman, moving about 20.5 billion cubic meters in 2025, but spare capacity is limited, and Oman’s LNG terminals are already operating at near full utilization.
Asia dominates demand for these energy flows, with nearly 90 percent of LNG exports through the Strait heading to Asian markets, while Europe accounts for just over 10 percent. This heavy dependence means any disruption would have global consequences, not just regional ones. In simple terms, the Strait of Hormuz is not just important, it is irreplaceable in the short term, and that is what gives it such immense economic and geopolitical significance.
What Has Iran Actually Done?
Under the recent ceasefire agreement, Iran’s Foreign Minister Seyed Abbas Araghchi stated that safe passage through the Strait of Hormuz would be allowed for a limited two-week period, but only through coordination with Iran’s armed forces and subject to technical conditions. Alongside this, multiple reports suggest that Iran is seeking to charge around USD 2 million per ship for transit during this window.
According to Associated Press, Iran’s Parliament approved a draft bill on April 7 to formalise such tolls, with the revenue expected to support post-war reconstruction. Reports cited by News18, referencing Iran’s Fars News Agency, indicate that this toll proposal was also presented to the United States during ceasefire negotiations. Even Donald Trump hinted at potential financial upside from the arrangement, suggesting that Iran could begin rebuilding while the US helps stabilize shipping activity in the Strait.
Further details reported by Mint and confirmed by officials speaking to The New York Times suggest that the agreement may allow both Iran and Oman to impose transit fees, with a proposed charge of roughly Rs. 18.5 crore, or USD 2 million, per vessel. The revenue, in some cases, could be shared between the two countries given Oman’s position on the opposite side of the Strait.
Beyond the temporary ceasefire, Iran appears to be pushing for a more permanent arrangement. According to Reuters, Iranian officials have indicated that any long-term peace deal should include the right to levy such fees, with pricing potentially varying based on the type of vessel, cargo, and broader conditions.
On the ground, enforcement mechanisms are already being tested. Reports from The Wall Street Journal suggest that Iran’s Islamic Revolutionary Guard Corps has begun asking ships to pre-arrange transit approvals, share cargo and vessel details in advance, and make payments upfront, in some cases through cryptocurrency or Chinese yuan. Some vessels have even reported warnings that failure to comply could lead to targeting or denial of passage.
Operationally, ships are being directed to follow specific routes closer to Iran’s coastline, particularly between Qeshm and Larak islands, with a tiered system emerging where certain cargoes or countries may receive smoother passage while others face delays or restrictions.
However, this approach sits in a legal grey area. Under the United Nations Convention on the Law of the Sea, countries bordering international straits are not allowed to charge fees simply for transit. They can only levy charges for specific services like piloting or port assistance, and even those must be applied uniformly. This is very different from man-made canals like the Suez or Panama, where transit fees are standard practice.
In effect, Iran is attempting something unprecedented, testing whether control over one of the world’s most critical chokepoints can be turned into a direct and scalable revenue stream.
The USD 90 Billion Math
Once the idea of a toll is introduced, the next obvious question is how much could Iran actually earn from it? The answer depends on how aggressively the system is implemented, but even conservative estimates suggest the numbers could be massive.
According to a report by JPMorgan Chase, Iran has explored a model where it charges around USD 2 million per vessel, with an estimated 100 to 130 ships passing through the Strait of Hormuz per day. At that scale, annual revenues could range between USD 70 billion and USD 90 billion, if such a system were fully implemented. Even in a more limited scenario, the numbers are still significant. The same report notes that charging USD 2 million to the 2,000 to 3,000 commercial vessels currently stranded in the Gulf could generate between USD 4 billion and USD 6 billion, an amount that already rivals or even exceeds annual toll collections from major global canals like Suez and Panama.
However, Iran may not necessarily rely on a flat per-ship fee. According to Financial Times, an alternative model being discussed involves charging around USD 1 per barrel for oil shipments. Under this structure, laden tankers would pay based on the volume they carry, while empty vessels could be allowed to pass without charges. Larger vessels such as supertankers could still end up paying millions of dollars depending on their size and cargo.
Here, the scale of Hormuz becomes critical. According to the International Energy Agency, nearly 20 million barrels of oil moved through the Strait per day in 2025. At a rate of USD 1 per barrel, this alone could translate into roughly USD 20 million in daily revenue, or about USD 7.3 billion annually, just from oil flows, without factoring in LNG or other cargo.
Some estimates go even further. A report by Iran International suggests that if Iran successfully builds a broader system of charges around transit and related services, total annual revenues could reach between USD 70 billion and USD 80 billion. To put that into perspective, data cited by Caspian Post shows that Iran earned about USD 41.1 billion from oil exports in 2023, which increased to USD 46.7 billion in 2024. In other words, a fully scaled toll system could potentially generate more revenue than Iran’s entire oil export business.
Taken together, this is what makes the idea so powerful. What started as a temporary wartime arrangement could, if expanded, turn one of the world’s most critical energy chokepoints into a revenue stream worth tens of billions of dollars annually.
What Happens If This Continues?
If the current situation evolves into a more permanent system, the impact may not be as straightforward as it first appears. Surprisingly, some economists believe the direct cost of such tolls may not significantly hurt global consumers.
According to Bruegel, even a USD 2 million charge on a large oil tanker carrying around 2 million barrels would effectively translate into just a USD 1 per barrel increase. This means the burden would not fall heavily on end consumers, but largely on the Gulf countries that export oil through the Strait. The think tank also noted that reopening the Strait fully would immediately bring back nearly 20 percent of global oil supply to the market, which could push prices lower. This, in turn, would reduce the unexpected gains currently being enjoyed by countries like Russia, whose oil has seen higher demand despite sanctions. For context, global oil prices have already surged from about USD 72 per barrel before the war to as high as USD 118 at the end of March.
However, the situation looks very different from the perspective of oil-producing nations in the Gulf. Countries like Saudi Arabia, the region’s largest producer, have supported the ceasefire but have strongly emphasized that the Strait must remain open without restrictions. The reason is simple, a significant portion of their oil has no alternative route. As per estimates, nearly 12 million barrels per day of crude production has already been affected due to limited export options. Existing pipelines that bypass the Strait do not have enough capacity to handle such volumes, and building new infrastructure would take years.
Because of these constraints, Gulf nations are unlikely to support a toll system unless the alternatives are far worse. According to Bruegel, one of the major concerns, particularly in Western countries, is that such revenues could strengthen Iran’s Islamic Revolutionary Guard Corps, which is linked to the country’s missile program, internal security operations, and is designated as a terrorist organization by both the United States and the European Union.
Despite all these possibilities, one thing remains clear, the stakes are extremely high. The sheer volume of oil flowing through the Strait, combined with the limited ability to reroute it, means that any prolonged disruption would have immediate and severe consequences. Oil prices would likely spike sharply, and physical shortages could emerge quickly. Even though most of the oil passing through Hormuz is destined for Asia, the impact would be felt globally because oil prices are set in an interconnected market.
More importantly, any disruption would not just affect the current supply. It could also lock away a large portion of the world’s spare oil production capacity, making it even harder to stabilize markets during a crisis. In other words, if this situation continues or escalates, it would not just reshape regional dynamics, it could redefine how global energy markets function.
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