Permanent Iran tolls on Strait of Hormuz would rock global economy, undo maritime navigation rules

Two key U.S. allies, Saudi Arabia and the United Arab Emirates, have issued a joint statement in Riyadh on March 15, 2024, warning that any permanent imposition of tolls by Iran on vessels transiting the Strait of Hormuz would severely destabilize the global economy and undermine established international maritime law. The statement, which follows recent Iranian parliamentary discussions about charging transit fees, argues that such a move would constitute a direct threat to the principle of freedom of navigation and could trigger a sharp increase in global energy prices. The allies emphasized that the strait is a critical international waterway, not subject to unilateral control. The Strait of Hormuz is arguably the world's most important maritime chokepoint for oil shipments, with approximately one-fifth of the world's petroleum liquids and one-third of global seaborne crude oil passing through its narrow confines. The potential for Iran to levy tolls represents a significant escalation in regional tensions and a direct challenge to the United Nations Convention on the Law of the Sea (UNCLOS), which generally guarantees innocent passage through such straits used for international navigation. Analysts note that Iran has previously threatened to close the strait during periods of heightened conflict, but a permanent toll system would represent a more sustained economic weaponization of the geography. The warning from Riyadh and Abu Dhabi underscores the profound economic risks. A toll would act as a de facto tax on global energy supplies, increasing costs for shipping companies that would inevitably be passed on to consumers worldwide. This could reignite inflationary pressures in economies still recovering from previous shocks. Furthermore, the move would set a dangerous precedent, potentially encouraging other nations to impose fees on critical waterways, thereby fragmenting the rules-based international maritime order that has facilitated global trade for decades. The statement serves as a preemptive diplomatic effort to rally international opposition and deter Tehran from proceeding with the controversial plan.