Iran Is Not Blocking the Strait of Hormuz. It's Running a Toll Booth
6 hours ago
- #Maritime Geopolitics
- #Iran Strait of Hormuz
- #Oil Trade Disruption
- Iran operates a selective permission-based system for ships transiting the Strait of Hormuz, allowing vessels from 'friendly' nations like China, Russia, India, Iraq, Pakistan, Turkey, and others, while barring those from the U.S., Israel, and countries imposing unilateral sanctions on Iran.
- The process involves ship operators submitting details to IRGC-linked intermediaries for vetting based on a 'friendliness ranking'; if approved, ships receive a VHF passcode and escort through Iranian waters near Larak Island, with tolls of about $1 per barrel often paid in Chinese yuan or cryptocurrencies.
- Despite permissions, fear and safety concerns significantly reduce traffic, with many Chinese vessels stranded and only a fraction of pre-war volumes transiting; insurance costs have surged, and war risk premiums increased dramatically.
- Iran uses this system to assert sovereignty over the strait, reward neutrality, punish alignment with the U.S., promote de-dollarization through yuan transactions, and test a new geopolitical architecture, while facing weak enforcement of international laws against such selective blockades.
- The blockade has caused a sour crude crisis, spiking oil prices and creating supply shortages, with benchmarks like Dubai affected and premiums reaching historic highs; traffic remains drastically below normal, with thousands of vessels stranded.