Nearly eight months into the Iran war, the headlines are about carrier groups and stalled talks. Secretary of State Marco Rubio reportedly ordered Iran’s delegation out of New York last week, and a third U.S. carrier group is reportedly headed to the region. Beneath the military drama sit bookkeeping questions that will outlast the fighting: If ships must pay to pass through the Strait of Hormuz, who sets the price, who collects the money, and who checks the books?
The stakes are substantial. Roughly one-fifth of the world’s oil and liquefied natural gas moves through the strait. Since spring, Tehran has pressed for fees, sometimes insisting they are “service fees” rather than tolls. After the April truce, ships reportedly paid about $2 million apiece. Shipping industry reporting later put Iran’s ask at 5% to 7% of cargo value, with Oman discussing roughly 3%. Washington wants no fees at all.
I have spent two decades reviewing how governments collect and spend money. This proposal fails the first test I would apply to any of them: It has no ledger.
A payment nobody can lawfully receive or insure
In May, Iran created the Persian Gulf Strait Authority to operate the waterway. The United States has since sanctioned it. In late July, the Lloyd’s Market Association published a model clause telling hull underwriters they owe no indemnity for any Hormuz transit fee, and that their obligations on a vessel end once one is paid. The clause carves out charges for specific services that are legal under the law of the sea and sanctions rules, but that exception is narrow. One insurance industry source called the position a catch-22: Iran demands payment, and the insurer withdraws coverage for paying.
A charge that the payee cannot lawfully receive and the insurer will not cover is not a price. It is a liability waiting for a shipowner.
A percentage is a tax on crisis
Whether the fee is flat or tied to cargo value matters more than the headlines suggest. Consider a supertanker carrying 2 million barrels. At an illustrative $80 a barrel, the cargo is worth $160 million. Three percent is $4.8 million. Five percent is $8 million. Seven percent is $11.2 million. Compare that with the $2 million flat fee first reported. This is arithmetic, not a forecast, but it shows the range of exposure.
A percentage fee also rises with the oil price, so it charges the most exactly when a supply shock has already pushed prices up. Shipowners do not absorb that. It moves down the chain to charterers, refiners, and, finally, drivers and households. A MarineTraffic risk manager told Radio Free Europe/Radio Liberty that consumers would feel any toll system.
No payee, no schedule, no auditor
Who gets the money? Iran’s 10-point peace proposal would let it and Oman charge ships, and a regional official told the Associated Press the proceeds would fund reconstruction. Yet Oman, which holds the opposite shore and has ratified the law-of-the-sea treaty, told the International Maritime Organization’s council in July that it does not support transit fees, while seeing merit in voluntary support arrangements. That same month, the council said passage through the strait should remain free of tolls and charges. Iran has not ratified the treaty and disputes that it applies.
The result is no agreed payee, no published rate, no escrow, no independent audit, and no refund mechanism. In compliance work, that combination has a name: a control failure. No auditor would sign off on a grant program built this way. The world is being asked to accept it on a route that carries a fifth of its energy.
What Washington should demand
The U.S. is not a bystander, and its leverage is not cost-free. The blockade of Iranian ports and the sanctions on Iranian oil are the very levers Tehran wants lifted in exchange for reopening the strait, and its latest offer reportedly ties reopening to both. Bloomberg has reported that several European governments have begun to treat some fees as unavoidable, which suggests the no-fee line may not hold.
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If a fee regime arrives, whether by treaty text or by quiet practice, it should arrive with controls. First, a published schedule, flat and fixed, rather than a percentage of cargo. Second, proceeds held by a neutral custodian in escrow, with an independent audit released publicly. Third, a written answer from the Treasury Department, before any deal is signed, on whether it would license payments to a sanctioned authority, so that shipowners and insurers are not left guessing. Congress should ask for that answer on the record.
The shooting will stop eventually. What replaces it should not be a toll booth with no books. Whoever ends up collecting at the strait, the public is entitled to see the ledger.
Jose Navarro is a financial controller and public finance analyst with over 20 years in public finance, nonprofit management, and government contract compliance. He is the founder of the Navarro Report, and his work has appeared in the San Diego Union-Tribune and Times of San Diego.