Iran Plans to Legalize "Environmental Fee" for Strait of Hormuz Transits, Charging Up to $3 Billion Per Ship

Iran has announced that it is levying fees of $1.5 million to $2 million per vessel transiting the Strait of Hormuz, according to reports from Iran's semi-official Fars news agency. The Iranian government is considering formalizing these charges as an "environmental fee" to address the significant environmental damage incurred in the vital waterway over decades.

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The environmental damage inflicted on this region is very severe and extensive. It is necessary for ships passing through this strait for decades to come to share the costs required for environmental protection and restoration.

Mohsen Zanganeh, a member of the Iranian Parliament's Budget and Planning Committee, stated that the average fee collected per ship is within this range. Fars reported that payments have been made in various forms, including cash, stablecoin Tether (USDT), and in-kind contributions, with the collected funds being deposited into the national treasury. However, the report also noted that some vessels, such as those from Japan and South Korea, have passed through without paying the fee. Furthermore, major crude oil importers like China, considered a friendly nation, have expressed negative views on the charges, suggesting that the number of ships actually paying the fee might be limited.

The Iranian Department of Environment has drafted preliminary standards for collecting the environmental fee, which are expected to undergo legislative procedures soon. These standards encompass 19 articles, considering factors such as vessel size and air pollutant emissions. Arman Khoshan, head of the International Affairs Center at the Iranian Department of Environment, emphasized the severe and extensive environmental damage in the region, stating the necessity for ships transiting the strait to share the costs of environmental protection and restoration for decades to come.

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If we push too hard, the world may find ways to bypass the strait, like oil pipelines in Saudi Arabia or the UAE.

However, Fars also reported internal divisions within Iran regarding the collection of service fees from ships passing through the Strait of Hormuz. Mohsen Rafsanjani, a former Tehran city council member and a moderate reformist, cautioned that excessive assertiveness could lead the world to find alternative routes, similar to the oil pipelines in Saudi Arabia and the UAE. Conversely, Mansour Jafarzadeh, identified as an economic expert, argued that the annual revenue from transit fees, estimated at around $7.5 billion (approximately 11 trillion South Korean won), is not an excessively large sum. He highlighted that any disruption in the strait could shock the global economy, underscoring Iran's leverage in negotiations.

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The transit fee for the strait is not a very large amount, around $7.5 billion annually. What is important is that any disruption in the strait can shock the entire global economy, and this is the power Iran holds in negotiations.