The war that closed the Strait of Hormuz has ended – for now. But Tehran’s demand to act as toll booth keeper at the world’s most critical oil chokepoint could leave energy markets vulnerable and hardwire higher prices for years to come. The U.S. and Iran agreed on Tuesday to a two-week ceasefire brokered by Pakistan, subject to Tehran pausing its blockade of oil and gas traffic through the strait, according to U.S. President Donald Trump. An Iranian official said on Wednesday that the vital waterway, through which around a fifth of the world’s oil and gas flowed before the U.S.-Israeli war on Iran began nearly six weeks ago, could be reopened by Friday in a limited fashion under Iranian control. Tehran had also indicated on Tuesday that, under a permanent peace deal, it would seek to charge a fee for ships transiting the strait, which is just 34 km (21 miles) wide at its narrowest point between Iran and Oman.
With full details of the ceasefire deal still unclear, some media reports indicate that Oman has strongly pushed back, making clear that no such toll regime is acceptable under existing agreements, while others suggest that such a tolling system may already be in place.
Trump said in an interview with ABC News on Wednesday that the U.S. was also thinking about setting up a joint venture to charge ship tolls for access through Hormuz. How such a scheme would operate in practice remains far from clear. But Iran may hold the upper hand. The conflict has demonstrated Tehran’s ability to strike dozens of vessels using drones, missiles and sea mines – a capability that gives it powerful leverage even without a formal blockade.
FREEDOM OF NAVIGATION
An Iranian toll system would strike at one of the core principles of international law: freedom of navigation, under which ships may transit international waters without interference from coastal states. The United States has historically cast itself as the global guarantor of that principle, enforcing it through naval patrols and diplomatic pressure.
Allowing Iran to monetise control over Hormuz would therefore amount to a profound strategic reversal for Washington and a dramatic shock for the Middle East oil and gas sector, the economic lifeline of countries such as Saudi Arabia, the United Arab Emirates and Qatar.
It would introduce a permanent layer of political risk for both Gulf producers and their customers by giving Tehran disproportionate influence over which ships can transit and when. Iran could, for example, ban Israeli-owned vessels outright, slow Saudi shipments to apply pressure on Riyadh, or use delays as leverage in unrelated diplomatic disputes.
The region’s leading exporters – all close U.S. allies that absorbed heavy economic and infrastructure damage during Iranian attacks – would be deeply reluctant to see Tehran wield such power over their most critical trade artery. For Asian buyers the implications would be severe. China, Japan, South Korea and India rely heavily on Gulf supplies, and even modest, unpredictable disruptions would ripple rapidly through refining margins, spot liquefied natural gas prices and inflation expectations.
The extent of the damage would depend partly on which vessels Iran permits to transit and on what terms – ships heading to Iranian-friendly nations such as China, India, Iraq and Pakistan may face fewer restrictions, though the rules of passage remain deeply unclear.
HIGHER COSTS
Financially, the toll itself could prove significant. Reports suggest the fee could be as high as $2 million per transit, roughly equal to the total cost of chartering a very large crude carrier from the Middle East to China for an entire voyage in 2025.
Beyond the toll, elevated security risks would push insurance premiums higher for tankers and LNG carriers entering the Gulf, further inflating transportation costs. War-risk premia, already volatile during the conflict, would likely persist as a structural feature of the market.
Some vessels could attempt to hug Oman’s coastline while transiting Hormuz. But that would severely constrain overall traffic volumes and would still leave ships within range of Iranian missiles, drones and fast-attack craft.
ALTERNATIVE EXPORT ROUTES
These risks, compounded by the broader uncertainty of relations with Iran, mean Saudi Arabia and the UAE are likely to maintain alternative oil export routes used during the conflict for many months, if not years.
State oil giant Saudi Aramco began pumping large volumes of crude through its East–West pipeline to the Red Sea port of Yanbu shortly after the war broke out on February 28, activating contingency plans developed precisely for such a crisis.
The pipeline can carry 7 million barrels per day, of which around 5 million bpd are available for export, with the rest feeding domestic refineries. Saudi Arabia shipped an average of about 3.3 million bpd from west-coast ports in March, nearly half of its 2025 export volume, according to data from analytics firm Kpler. Yet even these alternatives have proven vulnerable. The East–West pipeline was hit in an Iranian attackjust hours after the ceasefire was announced, an industry source told Reuters, with flows expected to be affected.
The UAE likewise diverted additional volumes via its pipeline to the Fujairah oil terminal outside the Gulf. Exports from Fujairah rose to 1.6 million bpd in March from an average of about 1.1 million bpd in 2025, according to Kpler. These routes will remain indispensable, offering producers and buyers a partial hedge against Hormuz risk, but not a complete solution given their limited capacity and exposure to broader regional tensions. Even if a full toll system never materialises, the mere prospect of Iranian oversight has already altered risk perceptions. Iranian control over the strait would grant Tehran disproportionate power over the region’s economic lifeline — one Saudi Arabia and its allies would be certain to resist, diplomatically or otherwise. The ceasefire may be holding for now, but for Gulf oil and gas exporters, the battle over Hormuz is just beginning. (The opinions expressed here are those of Ron Bousso, a columnist for Reuters.)
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(Ron Bousso; Editing by Marguerita Choy)