Iran has proposed the creation of the "Hormuz Pact.
Iran is promoting the creation of a new control framework for one of the planet's most vital energy arteries, proposing the development of a "Hormuz Pact" that will define the terms of passage through the Strait of Hormuz. According to statements from the head of the Iranian government's information council, the plan involves drafting a multilateral document with the participation of regional countries, as well as Asian and Arab states, while the possibility of participation by European actors who utilize the strategic maritime route remains open.
The same official argued that United States efforts to establish control over Iranian oil resources have failed amid escalating tensions in the region. The joint US-Israeli military operation in the Middle East has led to an almost complete cessation of navigation through the Straits, which constitute a critical passage for the transport of oil and liquefied natural gas from Arab states to international markets.
This development has already caused a significant increase in global fuel prices, intensifying pressure on economies and consumers. Under current conditions, passage is permitted exclusively to countries that maintain friendly relations with Tehran. These include Russia, China, India, Iraq, and Pakistan, a fact that is reshaping the balances in global energy trade.
Meanwhile, according to a report by the Wall Street Journal, Donald Trump and his staff estimate that potential efforts to disengage and fully reopen the maritime passage would lead to an extension of the military operation, further complicating the already fragile situation in the region. Tehran's initiative is expected to intensify geopolitical confrontations, as the Strait of Hormuz remains a pivotal point for global energy security and market stability.
The... trap of Larak Island
In the meantime, Iran has quietly created a de facto safe shipping corridor north of Larak Island—off Bandar Abbas—where the Islamic Revolutionary Guard Corps (IRGC) and port authorities inspect every ship before allowing passage. Almost all transits in the last three weeks have bypassed the usual route and moved through the narrow channel north of Larak, near the Iranian coast, suggesting a "controlled access corridor based on permit," according to Windward. All 57 transits recorded since March 13 followed this detour, while almost none used the normal route. Ships were also observed forming queues north of Larak, awaiting permission, while several were rejected in recent days.
Iran passes bill to collect transit tolls
It is evident that Iran allows passage only to specific ships, giving priority to countries with friendly relations or vessels linked to its own trade. Furthermore, it is worth noting that the Iranian parliament passed a bill to institutionalize the collection of tolls from ships passing through the Strait in a move that solidifies Tehran's economic control over this key point. Among other things, the bill defines who can use the passage: the US, Israel, and states participating in anti-Iranian sanctions are now prohibited from passing. In case of violation, the Iranian military will strike with missiles.
The measure, which also requires the agreement of other countries in the region, provides for the imposition of fees on energy, commodity, and food transports. At least two ships paid a transit fee in Chinese yuan. In one instance, the process was conducted through a Chinese shipping services company acting as an intermediary. In practice, collection had already begun in mid-March, based on Lloyd’s List data, amounting to approximately $2 million per transit. Now Tehran is institutionalizing the legal basis for a new regime in the region, in cooperation with Oman. However, for countries friendly to Iran, exceptions can be made. Malaysia’s Transport Minister, Anthony Loke Siew Fook, stated that his country's tankers are not burdened due to good diplomatic relations, according to Bloomberg. According to the Malaysian Foreign Ministry, seven ships are already passing through the Strait unhindered.
How the new system works
In more detail, the new system operates as follows: Ship managers first contact intermediaries linked to the IRGC and submit detailed information, such as the IMO number, crew names, and final destination. If approved, they receive a transit code and route instructions. Upon entering Iranian waters, authorities request the code via radio and, if valid, an Iranian vessel escorts the ship. Those not approved are rejected. Despite the difficulty of identifying true ownership, most transits involve ships with links to Iran, Greece, and China, while some from Pakistan and India also appear. Countries such as India, Pakistan, Iraq, Malaysia, and China have reportedly negotiated directly with Tehran. Indian tankers secured safe passage without payment, while Chinese ships passed through coordination between the relevant parties. In one case, an Indian LPG vessel was escorted by Indian warships.
What international maritime law provides
From the perspective of international maritime law, the Strait of Hormuz falls under the "transit passage" regime of the UN Convention on the Law of the Sea (UNCLOS), which guarantees free passage for all ships, including military ones, and explicitly prohibits the imposition of fees, explains the head of legal practice at Grace Consulting Ltd, Ekaterina Orlova. "Article 38 of UNCLOS clarifies that coastal states can regulate navigation in straits only for reasons of security, protection of the marine environment, and navigation, but not for financial gain through direct transit fees," she says. In practice, the close proximity of the territorial waters of two states claiming control imposes restrictions, adds Lidings law firm partner Stepan Guzei. "For example, Oman since the late 1980s has set restrictions on the passage of warships and submarines, which are applied to some extent. A significant part of the defense infrastructure around the strait is located in island areas under Iranian jurisdiction," he reminds. Legally, states have the ability to control, but the issue is technical legitimacy. The Suez and Panama canals also charge fees, but they are artificial works and the states managing them can set tolls.
A natural water corridor
The Strait of Hormuz is a natural water corridor and falls under international law, not the legislation of coastal states, Orlova emphasizes. Examples show that attempts to impose a financial fee on natural straits often cause diplomatic and legal conflicts, Orlova reports, recalling the Iran-Gulf states dispute in the 1980s. However, in practice, adherence to international rules is hampered by the fact that neither Iran nor the US has ratified UNCLOS, explains Igor Yushkov, an expert at the Financial University of Russia. This creates additional risks for the stability of the international regime. Kremlin spokesperson Dmitry Peskov stated that the system of rules exists de jure, but de facto is not applied. Analysts agree that Tehran's plan is feasible and the transit fee will likely remain even after the situation stabilizes. "It is not excluded that Oman will participate. With the separation of entry and exit flows from the Persian Gulf, there can be a distribution of control: one side collecting a fee for passage in one direction, the other in the opposite," says Guzei. This will increase the cost of cargo and freight rates. Given the quantity of resources passing through the strait, the impact will be significant. The US is already examining scenarios if the price of oil reaches $200 per barrel, Bloomberg reports. The use of strategic reserves may temporarily contain prices, Yushkov notes, but it is not sustainable: reserves will be depleted and prices will continue to rise. The maximum target of 200 dollars per barrel is unlikely to be maintained—the final balance is estimated around 130–140 dollars/barrel, the expert predicts.
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