Iran Establishes De Facto Toll System in Strait of Hormuz, Prioritizing Oil Shipments to China

Iran has effectively transformed the Strait of Hormuz, the world's most critical oil shipping lane, into a de facto toll system under its control. Ships passing through the strait are now required to enter Iranian waters, submit to vetting by the Islamic Revolutionary Guards Corps (IRGC), and, in some cases, pay tolls in Chinese yuan. This move has cemented Tehran's authority over the strategic waterway, allowing it to prioritize oil shipments to China while disrupting global trade.

Impact on Global Oil Traffic

According to Lloyd’s List Intelligence, traffic through the Strait of Hormuz has plummeted by 90% since the onset of the Iran conflict, with only about 150 vessels transiting since March 1. This dramatic reduction has driven global oil prices higher and caused severe shortages in Asian nations reliant on Persian Gulf oil. Notably, Iran-affiliated ships account for 90% of recent transits, with many vessels turning off radio identification systems to avoid detection.

"Iran’s IRGC has imposed a de facto ‘toll booth’ regime in the Strait of Hormuz," says Lloyd’s List Intelligence.

The Role of China

The majority of Iran’s oil shipments are directed to small, private refineries in China, which remain indifferent to U.S. sanctions. Lloyd’s List reports that tolls are settled in yuan, further entrenching China as a key beneficiary of Iran’s new maritime strategy. Meanwhile, diplomatic pressure has allowed some vessels from other nations, including India, to pass through the strait.

Iran’s Formalization Efforts

Iran appears to be institutionalizing its control over the strait. The Iranian government recently notified the International Maritime Organization (IMO) of "precautionary measures" aimed at ensuring maritime safety, positioning its actions within international law. Additionally, local media reports indicate that Iran’s parliament is drafting legislation to formalize tolls for certain ships, solidifying its sovereignty over the waterway.

This strategic move by Iran underscores its growing influence in the region, prioritizing its economic interests and alliances while complicating global energy markets.