Oman presents Iran with Gulf-backed plan for voluntary fees to use Hormuz
Oman presented Iran with a Gulf-backed proposal for a system of voluntary fees on ships transiting the Strait of Hormuz, rather than mandatory tolls
The proposal is modelled on the arrangement used in the Strait of Malacca, where littoral states invite voluntary contributions from shipping to fund navigation, environmental protection, and search-and-rescue services
The plan follows a period of disruption to shipping through the strait linked to regional conflict, and is intended to restore normal trade flows through a corridor carrying a significant share of global oil and liquefied natural gas (LNG) shipments
A US official has publicly rejected the concept of tolls or fees for the strait, describing it as an international waterway that should remain free of restrictions from any single state
Strait of Hormuz — Geography and Strategic Significance
The Strait of Hormuz is a narrow sea passage connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea, bordered by Iran to the north and Oman (the Musandam exclave) to the south, with the United Arab Emirates also along its southern approaches. It is one of the world's most critical energy "choke points."
Key Details
- At its narrowest point, the strait is about 33 km (21 miles) wide; the designated shipping lanes used by commercial vessels are only about 3 km wide in each direction, separated by a buffer zone, placing them within the territorial waters of both Iran and Oman
- Roughly one-fifth of global oil demand and a large share of global LNG trade transits the strait daily, with the majority of these volumes destined for Asian markets
- The strait links the major oil-exporting states of the Persian Gulf (Saudi Arabia, Iraq, UAE, Kuwait, Qatar, Iran) to global markets
- India imports a significant share of its crude oil from Gulf countries, making uninterrupted passage through Hormuz a direct energy-security concern
The voluntary-fee proposal is an attempt to manage passage through this exact choke point without disrupting the roughly one-fifth of world oil flows that depend on it, underscoring why any Hormuz-related development carries outsized global economic consequence.
UNCLOS, International Straits, and the Right of Transit Passage
The United Nations Convention on the Law of the Sea (UNCLOS), 1982, classifies the Strait of Hormuz as an international strait used for international navigation, meaning vessels and aircraft of all nations enjoy the right of "transit passage" — continuous and expeditious passage — through it, even where the strait falls within the territorial waters of bordering states.
Key Details
- Transit passage (UNCLOS Part III) is distinct from "innocent passage" (Part II) applicable to territorial seas generally; transit passage cannot be suspended by the coastal state, unlike innocent passage in certain circumstances
- Iran has signed but not ratified UNCLOS, and asserts a more restrictive interpretation of passage rights through the strait than UNCLOS provides for
- Oman has ratified UNCLOS and has historically supported freedom of navigation through the strait while balancing its relationship with Iran
- Any fee-based mechanism for strait usage would need to be structured as voluntary/contributory (as proposed) rather than mandatory, to avoid conflicting with the international-strait status recognised under UNCLOS
The insistence on "voluntary" rather than mandatory fees in the Omani proposal is a direct response to the legal reality that Iran cannot unilaterally impose mandatory tolls on a UNCLOS-recognised international strait without contradicting the transit passage regime — explaining the design choice reported in the news.
Comparative Model — Strait of Malacca Cooperative Mechanism
The Strait of Malacca, between Indonesia, Malaysia, and Singapore, operates a cooperative mechanism in which the three littoral states invite voluntary financial contributions from shipping companies and user states to fund navigational aids, environmental protection, and safety of navigation, without imposing mandatory transit fees.
Key Details
- The Cooperative Mechanism for the Straits of Malacca and Singapore was established following IMO-led international meetings (from 2005), balancing the interests of littoral states, user states, and shipping industry
- It funds projects such as removal of shipwrecks, aids to navigation, and hydrographic surveys, largely through voluntary contributions rather than compulsory levies
- The Strait of Malacca is another major global chokepoint, carrying a substantial share of world trade and energy shipments between the Indian Ocean and the Pacific
The Omani proposal explicitly borrows the Malacca model, substituting a voluntary, cooperative funding mechanism for the mandatory toll regime Iran had earlier sought, illustrating how precedents from one global chokepoint are being applied to resolve tensions at another.
- Strait of Hormuz narrowest width: ~33 km (21 miles); shipping lanes ~3 km wide each direction
- Share of global oil demand transiting the strait: approximately one-fifth (~20%) daily
- Bordering states: Iran (north), Oman and UAE (south)
- Governing legal framework: UNCLOS 1982, Part III (transit passage through international straits)
- Comparable cooperative model: Strait of Malacca/Singapore Cooperative Mechanism, in place since 2005, involving Indonesia, Malaysia, and Singapore