Can Iran charge navigation fees for transit through the Strait of Hormuz? An Expert Explains
Iran has begun asserting the right to collect navigation fees from ships transiting the Strait of Hormuz, a narrow waterway connecting the Persian Gulf to th...
What Happened
- Iran has begun asserting the right to collect navigation fees from ships transiting the Strait of Hormuz, a narrow waterway connecting the Persian Gulf to the Gulf of Oman and the open ocean.
- Reports indicate that several dozen vessels have paid the toll and transited the strait, with Iran's parliament deputy speaker confirming that the first revenue from these tolls has been deposited into the Central Bank account.
- The move has been widely rejected by Gulf Arab states and the broader international community, which regard it as a violation of the principle of free transit passage enshrined in the UN Convention on the Law of the Sea (UNCLOS).
- Iran, which has signed but not ratified UNCLOS, argues it is not bound by the transit passage regime and asserts a more restrictive "innocent passage" framework applies in the strait.
- Legal experts note that even for non-parties, the transit passage rules for international straits are considered customary international law — binding on all states regardless of treaty ratification.
Static Topic Bridges
Strait of Hormuz: Strategic Geography
The Strait of Hormuz is a narrow sea passage between the Persian Gulf and the Gulf of Oman, with Iran on its northern coast and the Musandam Peninsula (territory of Oman, with the UAE also bordering the strait's southern approaches) on the south. It is approximately 167 km (104 miles) long, with navigable width narrowing to about 39–64 km (24–40 miles) at its narrowest point.
- The only sea route linking the energy-rich Persian Gulf to the global ocean, making it one of the world's foremost strategic chokepoints.
- Approximately 20–21 million barrels of petroleum and crude oil transit the strait daily — roughly 20% of global petroleum liquids consumption and approximately 25% of seaborne oil trade.
- Nearly 20% of the world's liquefied natural gas (LNG) trade also passes through the strait.
- About 84% of crude oil transiting Hormuz is destined for Asian markets; China, India, Japan, and South Korea collectively receive approximately 69% of Hormuz crude flows.
- Saudi Arabia is the largest exporter through the strait (~37% of the total), followed by Iraq (~23%) and the UAE (~13%).
Connection to this news: Iran's geographic position astride the strait gives it physical leverage, but international law constrains its legal right to monetise that position through transit fees.
UNCLOS and the Regime of Transit Passage
The United Nations Convention on the Law of the Sea (UNCLOS), adopted in 1982 and entered into force in 1994, is the principal framework governing international maritime law, including rights of navigation through straits used for international navigation.
- UNCLOS Part III (Articles 34–45) governs "Straits Used for International Navigation."
- Article 37 defines the scope: the transit passage regime applies to straits connecting one part of the high seas or EEZ to another part of the high seas or EEZ.
- Article 38: All ships and aircraft enjoy the right of transit passage — continuous and expeditious navigation — through such straits. This right "shall not be impeded."
- Article 44: Explicitly prohibits bordering states from suspending transit passage. "There shall be no suspension of transit passage."
- Article 26 of UNCLOS prohibits states from levying charges on foreign ships merely for passage; fees may only be collected for specific services actually rendered (e.g., pilotage, if provided).
- The transit passage regime supersedes the more restrictive "innocent passage" regime (Articles 17–32) which applies in ordinary territorial waters and can be suspended by the coastal state for security reasons. Transit passage cannot be suspended even for security.
- As of 2026, 170 states have ratified UNCLOS. The United States has signed but not ratified; Iran has signed but not ratified.
Connection to this news: Iran's claim to apply "innocent passage" rather than "transit passage" in the strait is the legal crux of the dispute. If accepted, it would allow Iran to regulate — and charge for — passage in ways the transit passage regime prohibits.
Customary International Law vs. Treaty Law in Maritime Contexts
A foundational principle of international law is that treaty obligations bind only state parties. However, when treaty provisions codify pre-existing state practice and opinio juris (the belief that the practice is legally obligatory), those provisions become part of customary international law — binding on all states, whether or not they ratified the treaty.
- The International Court of Justice (ICJ) Statute (Article 38) recognises customary international law as a primary source of international law, alongside treaties and general principles.
- The transit passage regime for international straits is widely regarded by international legal scholars, the ICJ, and state practice as reflecting customary international law, not merely a treaty obligation.
- The US (a non-party to UNCLOS) and Iran both dispute different aspects of the convention but the US explicitly upholds transit passage rights as part of customary law — hence the US Navy's Freedom of Navigation Operations (FONOPs) in international straits.
- "Innocent passage" (UNCLOS Articles 17–32) can be regulated and even suspended; "transit passage" (Articles 37–44) cannot — which is why the legal classification is strategically significant.
- Precedent: In the Corfu Channel Case (ICJ, 1949), the Court held that all states are entitled to put warships through international straits without prior authorisation of the coastal state — an early articulation of what UNCLOS later codified as transit passage.
Connection to this news: Iran's legal argument — that it is not bound by transit passage rules because it has not ratified UNCLOS, and that these rules are not customary international law — is contested by most international legal opinion, but Iran's actual enforcement of tolls creates a de facto challenge to the existing framework.
Freedom of Navigation and Geopolitical Implications
Freedom of navigation (FON) is a principle of customary international law guaranteeing that vessels of all states may pass through international waters. It is one of the oldest doctrines in maritime law and is foundational to global trade, which relies on predictable and cost-free passage through chokepoints.
- The US conducts Freedom of Navigation Operations (FONOPs) globally to operationally challenge what it regards as excessive maritime claims by coastal states.
- The Persian Gulf region accounts for a disproportionate share of global energy exports; any disruption to Hormuz transit directly affects global energy prices.
- India imports approximately 60–65% of its crude oil needs, with a significant share from Persian Gulf suppliers (Saudi Arabia, Iraq, UAE) — all of whom transit Hormuz. Any toll regime or disruption directly impacts India's import costs and energy security.
- The Hormuz situation intersects with India's foreign policy: India maintains strategic partnerships with Iran (Chabahar Port development), Gulf Arab states (energy, diaspora), and the US (Quad, defence). India therefore has stakes on multiple sides of this dispute.
Connection to this news: Iran's navigation toll proposal is not merely a legal or bilateral dispute — it has direct implications for energy security, trade costs, and the stability of the rules-based international order that India nominally champions.
Key Facts & Data
- UNCLOS adopted: 1982 (Montego Bay, Jamaica); entered into force: 16 November 1994.
- States that have ratified UNCLOS (approx.): 170. Notable non-parties: USA (signed, not ratified), Iran (signed, not ratified).
- Relevant UNCLOS Articles: Art. 37 (scope), Art. 38 (right of transit passage), Art. 44 (no suspension of transit passage), Art. 26 (no charges for mere passage).
- Strait of Hormuz daily oil flow: approximately 20–21 million barrels/day (~20% of world petroleum consumption; ~25% of seaborne oil trade).
- LNG through Hormuz: approximately 20% of global LNG trade.
- Asian markets: receive ~84% of Hormuz crude; China, India, Japan, South Korea = ~69%.
- Corfu Channel Case (ICJ, 1949): established right of innocent passage through international straits — precursor to UNCLOS transit passage regime.
- Innocent passage vs. transit passage: Innocent passage can be regulated/suspended by coastal state; transit passage cannot be suspended (Art. 44).
- India's crude import dependence: approximately 60–65% of requirements met by imports, with Gulf states as leading suppliers.