US reinstates Strait of Hormuz blockade as Trump proposes 20% cargo fee
United States forces reinstated a naval blockade affecting traffic to and from Iranian ports and coastal areas as part of the wider regional conflict
A proposal was floated for a 20% fee on cargo transiting the Strait of Hormuz, framed as reimbursement for the cost of securing the waterway
Iran, which asserts jurisdiction over the strait, rejected the US intervention while separately arguing that any state ensuring safe passage through the strait would be entitled to compensation
The developments added further disruption to a shipping lane that carries a large share of the world's seaborne crude oil and LNG trade
Straits vs. Canals — Why a "Toll" on Hormuz Is Legally Contested
International straits such as Hormuz and man-made canals such as Suez or Panama are governed by entirely different legal regimes. Canals are built and maintained waterways under a specific national or treaty-based authority that lawfully levies tolls for transit (e.g., the Suez Canal Authority). Straits used for international navigation, by contrast, are natural formations governed by UNCLOS's transit passage regime, under which no bordering state may impede passage or charge vessels merely for transiting.
Key Details
- UNCLOS Article 26 provides that "no charge may be levied upon foreign ships by reason only of their passage through the territorial sea," permitting charges only as payment for specific services actually rendered to a vessel (e.g., pilotage, escort requested by the vessel)
- UNCLOS Article 44 additionally provides that transit passage through straits used for international navigation "shall not be suspended" by bordering states, reinforcing that tolls or blockades on mere transit lack a UNCLOS basis
- The Suez Canal, by contrast, operates under the 1888 Convention of Constantinople and Egyptian domestic law, with tolls set by the Suez Canal Authority as compensation for maintaining a constructed, dredged waterway — a fundamentally different legal basis from a naturally occurring strait
- Iran has signed but not ratified UNCLOS and has periodically asserted a "innocent passage only" position for warships transiting Hormuz, a position most other states dispute as inconsistent with customary transit passage law
Both the proposed cargo fee and the reinstated blockade run against the core UNCLOS principle that transit through an international strait cannot be conditioned on payment or suspended by a bordering or intervening power, distinguishing Hormuz's legal status from a toll-based canal.
India's Energy Import Dependence on the Strait of Hormuz
India's crude oil exposure to Hormuz has fallen through deliberate diversification, but dependence remains high for other fuels, making disruptions at the strait a differentiated risk across India's energy basket.
Key Details
- Around 70% of India's crude oil imports are now routed from sources outside the Strait of Hormuz, up from about 55% in preceding years, following diversification toward Russia, the Americas and West Africa
- India nonetheless still sources roughly 90% of its LPG imports through the Strait, alongside a large share of LNG imports from Qatar and the UAE, both Gulf-based suppliers
- India is the world's third-largest crude oil importer and consumes about 5.5 million barrels of crude per day, importing from roughly 40 countries as of 2026
- India maintains Strategic Petroleum Reserve facilities as a buffer against short-term supply disruptions from chokepoints such as Hormuz
A blockade or fee-based restriction at Hormuz would have an asymmetric effect on India's energy basket — limited on crude given diversification, but substantial on LPG, where import dependence through the strait remains very high.
Naval Blockade Under Customary International Law
A naval blockade — the use of naval force to prevent vessels from entering or leaving specified ports or coastlines — is governed by customary international law as restated in the 1994 San Remo Manual on International Law Applicable to Armed Conflicts at Sea. To be lawful, a blockade must be formally declared and notified, must be genuinely enforced (not merely announced), and must not deny a blockaded population access to essential humanitarian supplies.
Key Details
- The San Remo Manual is not a binding treaty but an authoritative restatement of customary law drafted by the International Institute of Humanitarian Law, integrating principles from the 1949 Geneva Conventions
- A blockade that targets neutral third-country shipping (rather than only the belligerent's own ports) raises additional legality questions under the law of neutrality
- Historical precedent for Gulf blockade-type disruption includes the 1984-88 "Tanker War" during the Iran-Iraq War, when both sides targeted neutral tankers transiting the same waterway
The reinstated blockade on Iranian ports, layered with a proposed fee on all cargo transiting the strait (not just Iran-bound cargo), extends beyond a traditional bilateral blockade into a broader claim over a strait used by vessels of all nations — the central legal tension in the current standoff.
- Proposed cargo fee: 20% levy floated on cargo transiting the Strait of Hormuz, later reported to have been reconsidered in favour of trade and investment arrangements with Gulf states
- UNCLOS Article 26: no charge may be levied on foreign ships for mere passage through the territorial sea; Article 44: transit passage through international straits "shall not be suspended"
- India's crude oil imports: ~70% now routed outside the Strait of Hormuz (up from ~55% previously); ~90% of LPG imports still transit the Strait
- India imports crude oil from around 40 countries and consumes roughly 5.5 million barrels/day, ranking as the world's third-largest crude importer
- San Remo Manual (1994): governing customary-law restatement on lawful naval blockades — requires declaration, effective enforcement and humanitarian exception