Tehran’s ‘toll booth’: How Iran picks who to let through Strait of Hormuz

The de facto blockade of the Strait of Hormuz by Iran in response to the United States-Israel war has caused one of the worst energy crises in decades with experts warning of a looming global recession.

The maritime route, through which about 20 percent of global oil and gas supplies pass, has been thrust into the spotlight as Tehran has used it as a geopolitical bargaining chip in the war.

Nearly 2,000 vessels are stranded close to the narrow strait, which is located between Iran on its north side and Oman and the United Arab Emirates on its south side.

On Thursday, Iranian media reported that the country’s parliament is seeking to pass legislation to collect tolls for ships transiting the world’s single most important oil passageway.

The reports by the Tasnim and Fars news agencies, quoting the chairman of parliament’s Civil Affairs Committee, said a draft law has been prepared and will soon be finalised by the Islamic Consultative Assembly’s legal team.

“According to this plan, Iran must collect fees to ensure the security of ships passing through the Strait of Hormuz,” an official was quoted as saying.

“This is completely natural. Just as in other corridors, when goods pass through a country, duties are paid. The Strait of Hormuz is also a corridor. We ensure its security, and it is natural for ships and tankers to pay us duties,” he added.

But even without that domestic legal framework, Iran’s Islamic Revolutionary Guard Corps (IRGC) has already imposed a “toll booth” system to control vessel traffic through the strait, the shipping journal Lloyd’s List reported on Wednesday.

So what is the toll booth system? How does it work? Is it legal?

Here’s what we know:

Why has Iran made the decision to impose tolls?

Iran, whose territorial waters extend into the strait, has blocked the passage of vessels carrying oil and liquefied natural gas (LNG) from the Gulf to the rest of the world since the US and Israel launched the war on February 28.

The move has sent global oil prices soaring above $100 per barrel – a jump of roughly 40 percent from before the war – forcing countries, particularly in Asia, to ration fuel and cut industrial production. Impacted countries have been lobbying Iran to allow vessels to pass through the strait, which is the only route through which to export oil and gas from most of the Gulf producers.

Iran has demanded international recognition of its right to exercise authority over the Strait of Hormuz as one of its five conditions for ending the war.

On Sunday, Iranian lawmaker Alaeddin Boroujerdi told the United Kingdom-based, Farsi-language satellite TV channel Iran International that the country has been charging some vessels $2m to pass through the strait.

“Now, because war has costs, naturally, we must do this and take transit fees from ships passing through the Strait of Hormuz,” he said.

How many ships are waiting to pass through the strait?

International Maritime Organization Secretary-General Arsenio Dominguez told Al Jazeera that nearly 2,000 ships are waiting on both sides of the strait to sail through it.

Maritime intelligence service Windward said this build-up suggests that “many operators have chosen to hold position outside Hormuz rather than commit immediately to long-haul rerouting.”

Only 16 crossings by ships with their Automatic Identification System (AIS) switched on were observed in the Strait of Hormuz in the week from March 15 to Sunday. Windward separately confirmed that four cargo vessels crossed or were crossing the strait overnight on March 13 and into the early morning, including one Pakistani vessel.

Windward also observed the presence of eight “dark ships” exceeding 290 metres (950ft) long and operating in the strait with their AIS switched off.

Dark ships included a US-sanctioned ship observed near the UAE’s Khor Fakkan port, an important hub for oil tankers, on March 16 before turning off its AIS.

What is the process to collect tolls?

While the Iranian parliament is yet to pass the legislation to impose tolls, in the past two weeks, “26 vessel transits through the strait have followed a route pre-approved under the IRGC ‘toll booth’ system that requires the ship operators to submit to a vetting scheme,” Lloyd’s List reported on Wednesday. These ships did not have their AIS switched on.

Sources familiar with the new system have told Lloyd’s List that to pass through the strait, vessel operators have to first reach out to intermediaries connected to the IRGC and submit all details of the vessel. This includes documentation, its International Maritime Organization number, the cargo being transported, the names of all members of the crew and the vessel’s final destination.

The intermediaries then submit the information to the IRGC’s naval command, which vets the information. If the vessel passes the screening, then the IRGC issues a clearance code and instructions on the route the vessel has to take to pass through the strait.

Once the ship is in the strait, IRGC commanders yell out over VHF radio, asking for the vessel’s clearance code. The ship answers, and if approved, a boat from Iran arrives to escort the vessel through the country’s territorial waters around Larak Island.

If ships don’t clear the IRGC navy’s screening test, they are not allowed to pass through the waterway.

On Tuesday, Alireza Tangsiri, the commander of the IRGC navy, said in a post on X that a container ship named Selen had been turned back due to “failure to comply with legal protocols and lack of permission” to pass through the Strait of Hormuz.

“The passage of any vessel through this waterway requires full coordination with Iran’s maritime authority,” he said.

Israel on Thursday said it killed Tangsiri along with other “senior officers of the naval command” in an air strike on Wednesday night. Iran has yet to comment on it.

Who pays the tolls?

Iran has said the Strait of Hormuz is open to all except the US and its allies.

In a letter sent to the 176 members of the International Maritime Organization on Tuesday, Iran said: “Non-hostile vessels, including those belonging to or associated with other States, may – provided that they neither participate in nor support acts of aggression against Iran and ‌fully ⁠comply with the declared safety and security regulations – benefit from safe passage through the Strait of Hormuz in coordination with the competent Iranian authorities.”

So far, after talks with what Iran called “friendly” nations, some ships from Malaysia, China, Egypt, South Korea and India have been allowed to pass through the strait.

According to Lloyd’s, at least two vessels that have transited the strait so far have paid a fee in yuan, China’s currency. Lloyd’s List said on Monday that one “transit was brokered by a Chinese maritime services company acting as an intermediary, which also handled the payment to Iranian authorities”. It is, however, not clear how much the vessels paid.

But according to the Indian government, no payments have been made by New Delhi to Iran to secure the safe passage of Indian vessels through the strait.

“No permission is required to sail through the strait. … There is freedom for navigation through the strait. Since the strait is narrow, only the entry and exit lanes are demarked, which need to be followed by shipping lines. … It is the decision of the charterer and shipping company when to sail or when not to sail,” Rajesh Kumar Sinha, special secretary of the Indian Ministry of Ports, Shipping and Waterways, said on Tuesday, according to Indian media reports.

The ministry added that two ships carrying more than 92,600 tonnes of liquefied petroleum gas, had transited and are scheduled to reach the subcontinent between Thursday and Saturday.

Apurva Mehta, a partner at the Indian law firm ANB Legal, told Al Jazeera that permitting certain friendly nations to transit the Strait of Hormuz would be discriminatory.

“It is currently not clear which vessels would have to pay toll in the coming days and the currency in which such payments will be made,” she said.

“However, it would appear that commercial considerations would overpower legitimacy of such ‘tolls’ and nations would be keen on clearing their consignments, even if it would subject them to payment of ‘tolls’,” she added.

Is charging tolls on vessels passing through the strait legal?

According to Article 38 of the United Nations Convention on the Law of the Sea (UNCLOS), all ships and aircraft “enjoy the right of transit passage”, which cannot be suspended by any country.

Under Article 17 of the convention, every foreign ship has a right of innocent passage in the territorial waters of any nation, Mehta said.

“Under Article 19 of the UNCLOS, passage is innocent so long as it is not prejudicial to the peace, good order or security of the coastal state,” she told Al Jazeera.

Mehta explained that there are 13 categories under which the passage may be considered “prejudicial” by the coastal state.

“If the coastal state deems a passage to be not innocent, they can take necessary steps to prevent such passage, including suspending in specified areas of its territorial sea the innocent passage of foreign ships if such suspension is essential for the protection of its security,” she said.

Mehta noted that although Iran is a signatory to the UNCLOS, its parliament has not ratified it.

“Therefore, Iran would contend that they are not bound by the international regime under UNCLOS,” she told Al Jazeera.

Jason Chuah, a professor of maritime law, said at its narrowest point, the Strait of Hormuz is only 21 nautical miles (39km) wide, and under the UNCLOS, coastal states may claim up to 12 nautical miles (22km) of sea from their coasts as their territorial waters.

“The entire width of the strait consists of the overlapping territorial seas of Iran and Oman,” Chuah from the City University of London said, adding that there is no high sea, or parts of the sea beyond the territorial waters of a country.

“Iran thus claims sovereignty over the area,” he told Al Jazeera.

However, he highlighted that Iran has no jurisdiction on anything beyond 12 nautical miles from its coast. “So it cannot charge a toll if your ship uses the Omani coastline. But it reserves the right to attack any ship whether on the Omani or Iranian side by missiles, mines or drones,” he said.

“So if you want your ship to be safe, you might decide to sail on the Iranian side and pay and get safe passage.”

He added that under the laws of armed conflict and the principle of self-defence, a belligerent state like Iran may also argue it has the right to “visit and search” vessels to ensure they are not contributing to the enemy’s war effort.

Visit and search procedures apply during times of war when “belligerent warships have a traditional right to stop and board merchant vessels to verify their nationality and check for contraband intended for the enemy,” Chuah explained.

He noted that for this to be legal under Article 51 of UNCLOS, the action must be necessary to repel an attack and proportionate.

“I would, however, argue that stopping all commercial traffic or charging transit fees exceeds the bounds of self-defence and becomes illegal economic warfare,” he said.

This is not the first time that wartime tolls have been reported.

In October 2024, a UN Security Council report alleged that Yemen’s Houthis had been charging ships passing along its coastline.

“The Houthis allegedly collected illegal fees from a few shipping agencies to allow their ships to sail through the Red Sea and the Gulf of Aden without being attacked,” the UN report said. “The sources estimate the Houthis’ earnings from these illegal safe-transit fees to be about $180 million per month,” the report added. The Houthis have rejected these claims.

At that time, the Iran-backed Houthis had carried out attacks on commercial ships in the Red Sea in solidarity with Palestinians. The Houthis had claimed they were targeting Israeli-linked or Israel-bound vessels in protest against Israel’s genocidal war on Gaza.

While Iran has yet to legally ratify its toll booth system, Sultan al-Jaber, the CEO of the Abu Dhabi state oil company, ADNOC, has described any restriction of passage through the Strait of Hormuz by Iran as “economic terrorism”.

“When Iran holds Hormuz hostage, every nation pays the ransom at the gas pump, at the grocery store, at the pharmacy,” al-Jaber said in a speech in the US on Thursday.

“No country can be allowed to destabilise the global economy in this way. Not now. Not ever,” he added.