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Energy Markets · Geopolitics · Oil Tolls · Strait Of Hormuz
Iran demands a $1-$2 per barrel transit fee for Strait of Hormuz passage, effectively closing the strait to most traffic, with economists projecting Gulf states will bear 80% to 95% of the estimated $14 billion annual cost on oil shipments alone, despite G7 opposition.
The proposed toll violates international law and fragments global trade, drawing G7 condemnation. President Trump has sent mixed signals, initially calling a joint venture a "beautiful thing" for peace, but later demanding Iran stop charging fees.
Despite a US-Iran cease-fire, the strait remains restricted to around a dozen ships daily, down from over 100 pre-war, according to Windward and S&P Global Market Intelligence. Economists Guntram Wolff and Holger Schmieding calculate that Gulf producers like Kuwait and the UAE will absorb the $1-$2 per barrel toll, as oil is a globally priced commodity, leading to an estimated $14 billion annual cost for Gulf states on oil shipments alone.
This cost, however, is a fraction of the $35-$40 per barrel war-related price increase, and Gulf states benefit massively from restored transit. Hamid Hosseini, spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, confirmed Iran collects a $1 per barrel tariff in cryptocurrency, offering preferential treatment for yuan payments.
Jacob Kirkegaard of the Peterson Institute for International Economics warns this sets a dangerous precedent, undermining freedom of navigation and enriching Iran, potentially leading to increased fees and geopolitical risk. China, a key Iranian ally, opposes the toll, calling for normal passage restoration.
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