In the late 18th century a vessel carrying about 50 tonnes of wheat passed through the Dardanelles to modern-day Ukraine. To transit the strait with that modest cargo, the merchant Apaştaş Parasara knew he would have to pay the Ottomans a fee for safe passage.
The duty, called İzn-i sefînei, was about 300 akçe, according to historical records, a measure of silver equivalent to about $15,000 today. It formed part of an elaborate series of tolls and permissions that the Ottomans levied on ships traversing to what they considered their private inland lake, the Black Sea.
Modern maritime law explicitly forbids states from charging ships to pass through territorial waters. But that has not stopped Iran, 230 years later, from saying that it will levy fees of up to $2mn for ships to pass through the Strait of Hormuz, a previously open waterway through which more than a fifth of the world’s seaborne oil and gas transit.
“The whole issue of a toll on an international waterway is complicated and possibly illegal,” said Andrew Rigden Green, a partner in maritime disputes at the law firm Watson, Farley & Williams.
Yörük Işik, a maritime shipping analyst who runs the Istanbul-based Bosphorus Observer consultancy, said: “No fees can be charged for transit on a natural waterway. It would open a Pandora’s box.” Such a scheme could “overturn centuries of maritime law”, he said.
The public announcement of a Hormuz toll system came after the agreement of a shaky ceasefire between the US and Iran. It followed weeks of fighting during which the strait has been shut to all but a handful of ships approved by Iran’s Islamic Revolutionary Guard Corps.
Transits made shortly before the ceasefire were charged on a piecemeal basis, said people with knowledge of the passages, with little clarity about how many vessels were involved in the shadowy transactions.
Iran’s Oil, Gas and Petrochemical Products Exporters’ Union has since said payments should be made in cryptocurrency in order to avoid US sanctions.
Since Iran has sought to exert control over the strait, parallels have been drawn with other narrow waterways that charge fees of various sorts such as the Bosphorus in Istanbul or the Suez and Panama canals.
But Andrew Serdy, professor of the public international law of the sea at the University of Southampton, said these have “their own individual bespoke treaty regimes”. “The Strait of Hormuz is, for the moment at least, under the general international law of the sea.”
Outside specific treaties, the only country to have exerted financial control over a strait for an extended period is Denmark, which from about 1429 applied tolls on the Øresund. Ships were required to stop at Elsinore, the backdrop for William Shakespeare’s Hamlet, and pay 1-5 per cent of their cargo value to the Danish crown.
The practice of charging “sound dues” was stopped after an increasingly powerful US pushed back against the scheme. A British House of Commons report at the time described the levies as “the most objectionable in taxes that fall upon trade” arguing they were “unequal in their operation, and they occasion great loss of time”.
A treaty ending the practice, with parties paying compensation to Denmark for the loss of revenues, was agreed in 1857.
Paying fees continues for the Suez and Panama canals, providing billions of dollars each year to their respective authorities. These are under agreed treaties which allow for fees to cover maintenance and infrastructure.
Serdy said: “The canals run through land territory where the states concerned — Panama, Egypt — have complete sovereignty subject only to the treaties in question and are therefore entitled to charge tolls.”
The Suez Canal is the most lucrative of the waterways, reaping a record $10.3bn in transit fees in 2023 before conflict in the Middle East choked traffic in the region and sent the majority of cargoes around the Cape of Good Hope.
By comparison, the analytics firm Kpler estimates that formalising the Strait of Hormuz into a fee-paying corridor could deliver $5bn-$8bn annually to Iran and Oman, whose territorial waters cover the southern half of the strait, if such an agreement were possible.
Experts suggest the Bosphorus, a Turkish territorial waterway, is the nearest comparison to Hormuz. It is governed by the Montreux Convention, which allows Ankara to charge ships not for transit but for lighthouse, health inspection and rescue services, calculated based on net tonnage. The revenues amount to about $250mn from ships that do not dock.
All that the Iranians would be offering in terms of services would be security from its own military and any potential mines in the main shipping lanes, experts noted.
George Macheras, global head of maritime sector at Watson, Farley & Williams, compared fees being charged and collected by the Revolutionary Guards to the British military charging for use of the English Channel.
However, he noted that neither Iran nor the US has ratified the UN Convention on the Law of the Sea, which governs international maritime passage. Donald Trump has both criticised the Islamic regime for demanding fees for safe passage and suggested Washington might someday join Tehran in a fee-paying venture in the strait.
Iran and the US also disagree with how international law should be applied to Hormuz, with Tehran long signalling that it would like to exercise more control over the critical strait.
When it signed the convention in 1982, Tehran issued a declaration stipulating that countries not party to the treaty, such as the US, would not be able to enjoy rights of free passage through the strait.
What makes the Strait of Hormuz unique compared to all of the other examples is that the Iranians “have only got one side”, whereas the other countries control both sides of the waterways, said Helen Doe, maritime historian at the University of Exeter.
“There have always been historical clashes because of these chokepoints,” she added.
Gulf and western governments, along with shipowners, have expressed frustration and resistance to restriction of the previously open route.
“We do not believe the payment of fees aligns with international law and we would oppose their imposition,” said Phillip Belcher, marine director at Intertanko, the association for independent tanker owners. “We’re amazed that a starting point for negotiations in Pakistan is that a toll and sovereignty of the strait could be discussed.”
Additional reporting by Jamie John and Andrew England in London. Cartography by Alan Smith and Ian Bott.
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