Why Iran Cannot Legally Charge Transit Fees at the Strait of Hormuz: International Maritime Law Explained

Iran has been widely condemned for demanding up to USD 2 million per vessel for what it has called "safe passage" through the Strait of Hormuz since the outbreak of the US-Israeli war with Iran in early 2026. Iran's government has justified the fees as war reparations for damage sustained during US-Israeli military strikes, as well as payment for navigational services, environmental protection, and enhanced security. However, maritime law experts and international bodies argue that Iran has no legal basis to impose such fees.

Under international maritime law — specifically the United Nations Convention on the Law of the Sea (UNCLOS) — natural straits that connect two parts of the high seas are governed by the principle of "transit passage." This principle grants vessels and aircraft from all nations the right to pass through such straits freely, without delay or anchoring (except in emergencies), and without interference from the coastal state. Coastal states may only levy strictly limited service charges, such as pilotage and towing fees.

The Strait of Hormuz, squeezed between Iran and Oman, qualifies as such an international strait. It is fundamentally different in legal character from man-made canals such as the Suez Canal and the Panama Canal. Egypt's Suez Canal — completed in 1869 — and Panama's Canal are artificial waterways that their respective countries built and maintain at ongoing cost, giving them the legal right to charge commercial tolls to fund construction, dredging, maintenance, and operational services.

The Institute for the Study of War (ISW) has labelled Iran's transit charges a maritime "protection racket." The United States and China have reportedly agreed on joint opposition to the levy, with the US State Department citing a shared position against Iran's demands. While some Asian shipping firms and smaller operators have quietly paid the fees, major global players have refused. For now, the Strait of Hormuz remains in a state of legal and operational ambiguity — far removed from the established, rule-bound toll systems governing the Suez and Panama Canals.