Proposed Hormuz passage deal not feasible for shipping industry, sources say

A proposed agreement that would grant Iran control over maritime traffic in the Strait of Hormuz is facing strong opposition from the shipping industry, which deems it unworkable and a threat to international law. Sources indicate that U.S. sanctions and complex insurance clauses present major obstacles to the deal's implementation.

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A toll in all but name

The proposed plan, reportedly negotiated between Iran and Oman, would allow Tehran to monitor and potentially intervene with ships entering the Persian Gulf. Outbound traffic would navigate a route between Iran and Oman, requiring exit clearance after notifying Iran. This arrangement has been met with criticism, with industry insiders suggesting it amounts to "a toll in all but name."

Global shipping organizations have voiced their concerns in an open letter, emphasizing the critical importance of safe and unimpeded passage through international waterways for economic stability and energy security. They argue that introducing compulsory fees would establish a dangerous precedent, potentially eroding the established legal framework governing transit through such vital straits. The UN's International Maritime Organization has declined to comment on the proposals, though its governing council previously called for unimpeded transit and the absence of tolls.

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The ability of merchant ships to navigate international waterways "safely, predictably and without unnecessary impediment is fundamental to resilient supply chains, economic stability and energy security."

Iran is reportedly seeking fees between 5% and 7% of cargo value, while Oman is considering around 3%. Washington, however, insists on no fees at all. The imposition of any such charges would create significant compliance issues for shipping companies and oil traders, particularly given existing U.S. sanctions on the region.

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It would establish a precedent that could undermine the internationally recognized legal framework governing straits used for international navigation and transit passage.