Iran and Oman Push to Charge Fees for Shipping Through Strategic Strait of Hormuz

Iran and Oman are advancing a plan to impose fees on ships passing through the Strait of Hormuz, a critical global trade route, despite public opposition from the United States. According to a Washington Post report citing an Iranian source and four diplomats familiar with the negotiations, this issue is expected to be central in talks between Washington and Tehran scheduled for April 16, 2024, in Doha, mediated by Qatar. Oman has formally proposed to the US and other Western countries that shipping companies pay service fees for passage through the strait. While the US negotiation team has received the proposal, it has reservations it plans to discuss with Omani officials during the talks.

If implemented, this would mark a significant shift in the status of the Strait of Hormuz, which for decades has been an international waterway allowing free navigation between Iran and Oman. Prior to the recent conflict escalation, oil and gas tankers transited the strait without fees en route from the Persian Gulf to global markets. During the recent Israel-Iran conflict, Iran effectively blockaded the strait, causing energy market shocks and soaring oil and gas prices worldwide. Iranian officials have repeatedly stated their intention to turn the strait into a consistent revenue source by charging tolls to vessels.

The future of the Strait of Hormuz has become a key issue in US-Iran negotiations aiming for a long-term agreement to prevent further regional escalation. Freedom of navigation and transit arrangements in the strait are highly sensitive topics for Gulf states, energy exporters, and Western powers. An Omani diplomat told the Washington Post that Oman’s proposal draws inspiration from the models used in the Malacca and Singapore Straits, where private funds supported by shipping companies finance navigation safety, route maintenance, and services. Oman and Iran hope to adapt this model to the new realities in Hormuz.

The developments come just hours before the Doha talks begin, focusing on implementing ceasefire understandings and regulating the strait’s future, which has become a major point of contention between Tehran, Washington, and their regional allies. Iranian Deputy Foreign Minister Kazem Gharibabadi said Iranian and Omani experts will soon start talks on managing the strait. He emphasized Iran’s demand to charge for services and the need to change shipping routes, stating, “The situation in the Strait of Hormuz will not return to what it was before the war.” He also noted Iran’s intention to control navigation routes and delay ships that do not comply, warning that if Oman does not cooperate on a management mechanism, Iran will proceed alone.

In contrast, Omani Foreign Minister Badr bin Hamad Al Busaidi stated that Oman does not support imposing tolls on passage through the Strait of Hormuz.