Iran says charging fees for 'navigational services' in Hormuz

What Happened

• Iran's foreign ministry stated that it is collecting fees for "navigational services" on vessels transiting the Strait of Hormuz, explicitly distinguishing this from "tolls" while asserting that navigation assistance and environmental protection measures justify service charges.
• Iran's Foreign Ministry spokesman stated "We do not charge tolls," while framing the fees as compensation for services rendered, including navigation assistance and environmental protection.
• Iran published a map claiming regulatory control over a stretch of the Strait of Hormuz that extends deep into the territorial waters of the United Arab Emirates and Oman, prompting five Gulf states to formally warn shipping companies through the International Maritime Organisation (IMO) not to comply with Iran's directives.
• Reports indicate some vessels have paid up to $2 million per passage, with transactions reportedly conducted in Chinese yuan, suggesting a deliberate move to bypass dollar-denominated maritime fee systems.
• The development comes amid a broader geopolitical context of escalating US-Iran tensions, with active US-Iran nuclear negotiations in progress in 2026.
• International maritime law experts and affected states argue the fees violate the right of transit passage under the United Nations Convention on the Law of the Sea (UNCLOS), specifically Articles 38 and 44.
• Iran has not ratified UNCLOS, which it uses to dispute the applicability of transit passage rights, creating a legally contested environment with no straightforward enforcement pathway.

Static Topic Bridges

UNCLOS and the Right of Transit Passage (Articles 37–44)

The United Nations Convention on the Law of the Sea (UNCLOS), adopted in 1982 and entering into force on November 16, 1994, is the foundational international legal framework governing all uses of the oceans. Part III (Articles 34–45) of UNCLOS specifically governs straits used for international navigation. Article 37 defines the scope: straits between one part of the high seas or an exclusive economic zone (EEZ) and another part of the high seas or EEZ. Article 38 establishes the right of transit passage — the freedom of navigation and overflight through such straits for continuous and expeditious transit — applicable to all ships and aircraft regardless of flag or type. Article 44 explicitly bars bordering states from hampering, suspending, or imposing charges merely for transit passage.

The Strait of Hormuz: Strategic Geography

The Strait of Hormuz is the world's most critical maritime chokepoint for energy trade. Located between Iran to the north and Oman and the United Arab Emirates to the south, it connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The strait is approximately 167 km long, with its narrowest navigable width around 34–39 km (21 nautical miles). The two designated shipping lanes — each approximately 3.2 km (2 miles) wide — are separated by a 3.2 km buffer zone. In 2024, an average of approximately 20 million barrels per day of oil (equivalent to about 20% of global petroleum liquids consumption) transited the strait, representing over one-quarter of total global seaborne oil trade. Approximately one-fifth of global LNG trade also transits Hormuz, primarily from Qatar.

Iran's Legal Position and the Non-UNCLOS Framework

Iran has not ratified UNCLOS and instead relies on earlier customary international law, the 1958 Geneva Convention on the Territorial Sea and Contiguous Zone, and bilateral agreements. Iran claims the strait falls partly within its territorial waters (12 nautical miles from its coast) and argues it is entitled to regulate activities therein. Under customary international law, even prior to UNCLOS, transit through international straits was governed by the right of "innocent passage" — a weaker standard that permitted suspension. Iran argues it retains sovereign regulatory authority, including service fee imposition, within its territorial sea.

India's Exposure: Hormuz and Energy Security

India is the world's third-largest consumer of crude oil and imports approximately 87% of its consumption. Over 60% of India's crude oil imports historically came from Persian Gulf countries (Iraq, Saudi Arabia, Kuwait, UAE), with a significant portion transiting the Strait of Hormuz. Following the outbreak of the West Asia conflict in February 2026, India has increased non-Hormuz sourcing to approximately 70% of crude imports (up from 55%), reflecting an active diversification drive. Any sustained closure or fee imposition on Hormuz would directly affect India's energy import costs and supply security.

Key Facts & Data

• Strait of Hormuz oil flow (2024): approximately 20 million barrels/day — ~20% of global petroleum consumption
• Strait of Hormuz LNG share: approximately one-fifth of global LNG trade (2024)
• Strait minimum navigable width: approximately 21 nautical miles (two 2-mile lanes, 2-mile buffer)
• Reported vessel transit fees: up to $2 million per passage
• Payments reportedly conducted in Chinese yuan
• Five Gulf states issued formal IMO warnings against compliance with Iran's directives (2026)
• UNCLOS adoption: December 10, 1982; entry into force: November 16, 1994
• Iran: has NOT ratified UNCLOS
• India ratified UNCLOS: June 29, 1995
• UNCLOS Article 38: right of transit passage through international straits — cannot be impeded or suspended
• UNCLOS Article 44: no charges may be levied on vessels exercising transit passage