Strait of Hormuz: Iran’s “Toll Booth” Tactics and the Global Shipping Squeeze
Iran has effectively transformed the Strait of Hormuz, one of the world’s most vital shipping arteries, into a lucrative “toll booth.” Since the commencement of hostilities involving the United States and Israel against the regime, Iran has reportedly reaped hundreds of millions of dollars in additional revenue from its own oil sales, while simultaneously restricting passage for many international vessels.
Maritime tracking agencies report a staggering 95 per cent drop in daily traffic through the Strait of Hormuz since February 28th. This dramatic decline is attributed to the escalating threat of attacks or the constant risk thereof within the Persian Gulf. However, a selective approach to traffic management has emerged, with Iranian allies and its own tankers seemingly granted unimpeded passage. This strategy, described by some as a “selective closure,” has forced other vessels to either risk the perilous journey or seek alternative, often longer and more expensive, routes.
Analysis of available marine tracking data and satellite imagery reveals that only a handful of large vessels – including tankers, bulk carriers, and container ships – are now transiting the narrow strait daily. This starkly contrasts with pre-conflict levels.
Sal Mercogliano, a former merchant mariner and marine historian, commented on the situation: “A comment that’s got some in the US government mad at me is that the Iranians have control of the strait. They’re running it like a toll booth.”
A New Corridor and De Facto Tolls
Evidence suggests Iran has established a new shipping corridor. On March 15th, the Pakistan-owned tanker Karachi became the first non-sanctioned oil tanker to pass through the Strait of Hormuz while broadcasting its tracking location. Its journey, noted to be close to the Iranian coast rather than the more common Omani-side lane, indicates a deliberate routing within Iranian waters. Analysts suggest this is a clear sign of Iran coordinating passage, allowing vessels to be positively identified within their territorial claims. Dr. Mercogliano noted that approximately a dozen vessels have now adopted this practice.
Furthermore, maritime data company Lloyd’s List has reported that Iran’s Islamic Revolutionary Guard Corps (IRGC) is imposing a de facto ‘toll booth’ regime. At least two ships have reportedly paid for passage through the strait. Iran is reportedly working on new legislation to formalise this process, with plans expected to be finalised soon. A senior Iranian parliamentary official, Alaeddin Boroujerdi, told state media that Iran is charging each ship a $2 million transit fee, asserting a “new, de facto sovereign regime in the Strait of Hormuz.”
Iran’s Oil Profits Amidst Global Pressure
While global economic and supply chains face mounting pressure due to Iran’s effective blockade, the regime continues to profit significantly from its oil exports. Iran’s crude oil exports have remained relatively unhindered by the conflict, with an estimated 1.6 million barrels per day being moved between March 1st and March 23rd, according to maritime intelligence firm TankerTrackers. The surge in oil prices, coupled with the United States’ decision to lift sanctions on Iranian oil to boost global supply, has further swelled the Iranian regime’s coffers.
This stands in stark contrast to nations heavily reliant on oil and gas imports from the Persian Gulf. Governments worldwide are scrambling to address shortages and soaring energy prices. Nations most acutely affected by the strait’s closure are actively pursuing diplomatic avenues with Tehran, though even those with established relationships with Iran are not guaranteed safe passage.
Vessels Navigating the Strait
Prior to the conflict’s escalation on February 28th, approximately 138 vessels transited the Strait of Hormuz daily, carrying one-fifth of the global oil and gas supply. However, data analysed by the ABC indicates that only around 150 ships, including about 46 oil tankers, have made the crossing between March 1st and March 26th. This represents a significant reduction from the pre-war average of roughly 50 vessels per day.
A notable portion of the ships successfully navigating the strait are Iranian-owned, although the full extent is unclear due to many Iranian vessels sailing without broadcasting their locations. Other vessels making the crossing in recent weeks are owned by companies from Greece, China, India, the United Arab Emirates, and the Marshall Islands. Some have received passage, while others have gambled on the risks involved.
Greece, for instance, accounts for the second-highest number of ships crossing the waterway. Industry sources attribute this to the proactive approach of some Greek ship owners. Dr. Mercogliano highlighted that the disruption in traffic has driven up shipping costs, benefiting certain companies. “When you have a charter that’s paying 10 times the normal value, you’re going to pay your crew a little bit extra money, and you’re going to run the strait — and that’s exactly what they did,” he explained.
Recent transits through Iran’s coastal waters have included several China and India-owned oil and gas tankers, broadcasting identifying information such as “CHINA OWNER” and “INDIA SHIP & IND CREW.” Earlier reports revealed the first ship bound for Australia to have escaped the Persian Gulf post-conflict was a Japanese-owned bulk carrier that transited the strait while broadcasting “CHINA OWNER.”
Behind-the-Scenes Diplomacy and Complex Negotiations
Several governments, including China and India, are reportedly engaged in direct diplomatic discussions with Tehran to secure safe passage for their vessels, according to Lloyd’s List. Sir John Jenkins, a retired senior British diplomat and Middle East expert, suggested potential negotiation strategies: “I assume the way you do it is by agreeing to an identification signal, by re-flagging tankers or … by having agreed protocols for identifying a particular shipment as belonging to or heading to a particular country.”
Large parts of Asia are heavily reliant on shipping through the Strait of Hormuz. India, for example, imports over 40 per cent of its crude oil from the Middle East, alongside approximately half of its liquefied natural gas (LNG) and most of its liquefied petroleum gas (LPG) shipments. Given this dependence, Indian ministers have expressed a preference for negotiating with Tehran. Indian Foreign Minister Subrahmanyam Jaishankar stated, “Certainly, from India’s perspective, it is better that we reason and we coordinate and we get a solution, than we don’t.” Indian Navy warships have been escorting some vessels out of the Persian Gulf via Iran’s shores.
China’s position is also significantly impacted, as it reportedly purchases around 90 per cent of the oil Iran exports globally. Sir John drew parallels to the Red Sea disruptions in late 2023, where Beijing reportedly leveraged its influence with Iran to quell Houthi actions. He believes it is in Tehran’s interest to allow oil to China to pass, given Beijing’s strong alliance. “The Chinese would have good access to central authorities, not just the political authorities in Tehran, but also the IRGC, which is [overseeing the strait],” he noted.
However, diplomacy faces significant hurdles. Japan, which depends on the Middle East for over 90 per cent of its oil, has attempted to leverage its friendly relations with Iran. Despite assurances from Iranian Foreign Minister Abbas Araghchi regarding support for Japan-related vessels, reports surfaced of two “zombie ships” – vessels sold for scrap long before the war – transiting the strait under concealed identities. Only a handful of genuine Japanese-owned ships have made the crossing since the conflict began, with an estimated 45 Japanese vessels still stranded in the Persian Gulf. Japan’s Foreign Minister Toshimitsu Motegi has stated the country is not considering unilateral negotiations, emphasising the need for a situation where all vessels can pass.
The complexity of communicating with the Iranian regime and ensuring compliance at local levels remains a significant challenge. Sir John highlighted the IRGC’s doctrine of delegating operational tactical decisions to local units, making central command and control a potential issue. “So the issue of how you make sure [some ships are allowed through] … given the degrading of central command and control in Iran, I mean, is an interesting issue,” he remarked.
In mid-March, France and Italy also initiated talks with Iran, seeking to secure safe passage for their ships. While one Italian-owned oil tanker transited the strait on March 1st, no French-owned ships have been recorded making the crossing. Sir John expressed scepticism about European countries negotiating directly with Tehran, given their NATO affiliations. France has since announced its military chief has held talks with numerous countries on a proposal to reopen the strait post-conflict.
Pakistan’s Mediating Role and the Path to De-escalation
Pakistan, a nation with significant military capabilities, has positioned itself as a key mediator between Iran and the United States. The country has a vested interest in ending the conflict due to its economic fragility and heavy reliance on energy imports from the Gulf. Despite public assertions from Iranian officials that no official negotiations with Washington are underway, reports suggest quiet openness to talks.
However, Pakistan itself remains significantly impacted by the blockade. While one of its oil tankers made headlines for successfully crossing the strait, other vessels remain trapped. A container ship bound for Pakistan, the Selen, was reportedly turned back by the IRGC for failing to comply with protocols and lacking permission to pass, underscoring the requirement for “full coordination with Iran’s maritime sovereignty.”
Navigating the complex relationships between Iran and the United States presents a delicate diplomatic challenge. Recalling past mediation efforts, such as former Japanese Prime Minister Shinzo Abe’s role during the Trump administration, experts note that the current situation involves open warfare, making negotiations even more contentious.
Sir John described Iran as a “lonely state,” where the regime is content with its non-aligned status, posing a challenge for identifying interlocutors. This time, Egypt, Türkiye, and Pakistan are acting as conduits, attempting to convey messages and explore avenues for de-escalation. The ultimate outcome of these negotiations and whether a ceasefire deal can be reached between Mr. Trump and Iranian leadership remains uncertain.
*The term “ships” in this article refers to tankers, bulk carriers, and container ships.
