The proposal landed Monday: President Trump wants the United States to charge for passage through the Strait of Hormuz, with Washington “reimbursed” at 20 percent for serving as “guardian” of a waterway that has historically carried a fifth of the world’s daily oil transports. The aim, on the administration’s own telling, is to restore international shipping levels — which have stayed low — Iranian fire in open waters being one deterrent, the earlier American naval blockade another. It would seem the world’s most strategic chokepoint now needs an invoice.
How it would work is, notably, the part nobody can explain. Implementation of this unprecedented toll is unclear — and Marco Rubio, the secretary of state, has previously called such a charge a “violation” of international law. Trump has leaned on the Panama Canal as precedent, the salient problem being that Panama’s tolls are lawful because its canal is artificial — a human-made waterway is private property under international law, owned and run by Panama, with tolls funding repairs and giant updates. For reference, a private sailboat transits that canal for roughly $3,000; a massive cargo ship pays north of $450,000 — fees strictly priced by vessel type, size, and cargo or passengers aboard. The Strait of Hormuz is not a canal. The New York Times puts the added cost of the Hormuz fee at more than $30 million for ships.
Iran, for its part, has form. Multiple international reports allege Tehran extracted an unofficial $2 million toll for “safe passage” after seeding the water with mines; the mines are not fully removed, though American forces began minesweeping after the June memorandum of understanding — an effort that also ran in April. Then on Monday, Iranian Foreign Minister Abbas Araghchi floated an official toll of his own, at a rate cheaper than Trump’s. “POTUS is absolutely right. Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service,” he wrote on X, adding: “Iran has always been the GUARDIAN of the Strait and will remain so FOREVER. 20% is of course too much. We will be fair,” A bidding war over protection, it would seem, has two willing bidders.
Meanwhile the Gulf is engineering around the problem. The Financial Times reported Monday that the UAE is reportedly weighing a brand-new east-coast port and container terminal at Fujairah — outside the strait — with Dubai’s DP World said to be in talks for both that and a new terminal at the existing harbor there, all to reduce dependence on the Jebel Ali hub, the Middle East’s premier logistics powerhouse. DP World declined comment. Saudi Arabia is further along: analyst Andy Lipow’s data shows roughly 4 million barrels a day being diverted through the East-West pipeline, the roughly 750-mile Petroline system that runs from Abqaiq on the Gulf coast to Yanbu on the Red Sea, with design capacity estimated at 7 million barrels a day after recent expansions. Tankers load at Yanbu, many sailing out the Red Sea. “What real master stroke was Saudi Arabia being able to put all that extra oil through the Yanbu pipeline, and it looks like UAE, with the help of the U.S. military, is getting back to pre-war levels. Really quite a positive surprise,” Rapidan Energy Group’s president Bob McNally said Monday. The UAE has also chartered tankers of its own to ferry crude out of the strait, lightering it onto larger vessels in open water for the run into Asia — maintaining sales, per Lipow, and keeping oil flowing to buyers who need it.
The catch is that bypassing Hormuz shifts risk rather than deleting it: tankers leaving Yanbu must still thread the Red Sea and the Bab el-Mandeb, a corridor where Houthi attacks remain a live threat, and Lipow warns that halting them would strip several million barrels a day more from the market entirely. The limits are structural, too. By the International Energy Agency’s count, just two Gulf producers — Saudi Arabia and the UAE — operate crude pipelines that get around the strait, with spare throughput the IEA estimates at somewhere between 3.5 million and 5.5 million barrels a day; Iraq, Kuwait, Qatar, Bahrain and Iran itself still push the overwhelming share of their oil through the waterway. In a prolonged closure, existing alternatives could not absorb all the stranded crude and liquefied natural gas. Lipow warns that Saudi Arabia, Kuwait and Iraq may eventually have to unwind recent production gains — storage filling up, empty tankers unable to berth at export terminals; the Peterson Institute’s Adam Posen reckons it would take a sustained problem, and 18 to 24 months, before enough new pipelines and shipping workarounds exist.
There is precedent for toll diplomacy, of a sort. In April, during a brief pause in the fighting, the administration floated a joint Hormuz toll to benefit both Iran and the U.S. “Big money will be made. Iran can start the reconstruction process. We’ll be loading up with supplies of all kinds, and just ‘hangin’ around’ in order to make sure that everything goes well. I feel confident that it will,” Trump wrote then on Truth Social, adding: “Just like we are experiencing in the U.S., this could be the Golden Age of the Middle East!!!” Months later the two countries were striking each other again, with Washington formally back at war as of last week. Technical talks grind on, Trump maintains that a peace deal remains possible, and lawmakers and the international community are urging the White House toward an ending. For all the noise, the salient point remains: the strait is still the shortest way around, and now everyone wants to be paid to watch it.
Sources
- Is Hormuz open? Trump's toll threat intensifies rush to bypass the Strait altogether
- What to know about Trump plan for Strait of Hormuz toll
