Iran has transformed its control of the Strait of Hormuz into a revenue-generating operation, reportedly charging vessels as much as $2 million per transit since mid-March. J.P. Morgan estimates that a fully operational regime could earn Tehran $70 billion to $90 billion annually. This strategy has shifted the conflict from one of defense to an offensive business model, with Iran establishing the Persian Gulf Strait Authority in May to regulate passage, requiring vessels to file detailed information and pay a fee for permits.
Despite an initial agreement with the U.S. in June, which allowed for a 60-day fee-free passage, Iran has rejected proposals for joint management of the strait with Oman, insisting on its right to control navigation through its waters. This aligns with Iran's broader strategy of calibrated escalation, aiming to make containment more costly than accommodating its demands. The U.S. has maintained that free passage must be restored and any tolls are illegal under international law, which upholds the right of peaceful transit through such straits without charges.
The situation has led to significant geopolitical tension. While the U.S. and regional partners are pushing for a deal to reopen the strait, with U.S. Treasury Secretary Scott Bessent suggesting a return to freedom of movement, Iran views the control over Hormuz as strategic leverage it did not employ before the current conflict. The closure and subsequent fees have had a global impact, driving energy prices up, though recent reports of potential agreements have seen oil prices drop below $80 per barrel and U.S. stock markets rally to record highs.
