US President Donald Trump said on Monday that the United States would charge 20% on cargoes for use of the Strait of Hormuz after a ceasefire with Iran broke down amid a dispute over Tehran's efforts to maintain control over the strategic waterway.
Iran shut down the 21-mile-wide strait that was the main route for a fifth of world oil supplies and other vital goods, including fertilizers, when the US and Israel attacked it on February 28, causing a global energy shock.
This is why it matters, how Trump's and Iran's stances differ, and how it affects the rest of the world:
As recently as June 25, US Secretary of State Marco Rubio said when meeting Gulf states and in response to Iran's demand for fees that "no country on Earth has the right to charge for the use of international waterways" and that fees for shipping would never be part of any deal.
But Trump has previously mooted the possibility of the US charging tolls if the deal with Iran were to break down.
"There will be NO TOLLS in the Hormuz Strait for 60 days during the Cease Fire Period, and there will be NO TOLLS after the 60 day period has expired, unless they are imposed by and for the United States of America, should the deal not be completed, for services rendered as the Guardian Angel to the countries of the Middle East for purposes of both past, present, and future reimbursement of costs," he wrote in a social media post on June 20.
With the ceasefire in tatters, he now appears to have reverted to his earlier stance.
"The USA will be, from this point forward, known as 'THE GUARDIAN OF THE HORMUZ STRAIT', but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped," he said in a social media post on Monday.
Trump has not explained how such charges would be imposed nor what legal authority he could use to demand them for passage.
How is Trump's toll demand different from Iran's?
Iran has made its lasting control over the Strait, whose waters it shares with Oman, its main priority in negotiations, seeing it as its strongest strategic lever with the outside world and the best guarantee of its security against future attacks.
It believes Washington had accepted this in the wording of last month's interim deal, which said Iran "will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only."
However, the US interpreted that language to mean only that Iran should facilitate safe passage for vessels and not impose restrictions backed by force.
During the war, Tehran set up the Persian Gulf Strait Authority that it says any vessel passing through the waterway must coordinate with, and it insists ships should only transit near the Iranian shoreline. It has targeted vessels trying to pass along the Omani shore that did not seek its permission.
It has said it may eventually charge passage fees but has not detailed what they would be.
What was the toll situation like before the war?
The Strait comprises the territorial waters of Iran and Oman, with the maritime boundary running along the middle.
The UNCLOS maritime convention governing international sea law says states bordering straits cannot demand payment simply for permission to pass through.
However, they can impose limited fees for specific services such as piloting, tugging or port services, though these may not be levied more heavily on vessels from any particular countries.
Neither Iran nor the United States is a signatory to UNCLOS, but it is widely regarded as international law, and the Strait of Hormuz is recognized as an international strait.
In 1968, Iran and Oman agreed on a traffic scheme with the International Maritime Organization under which major vessels would use sea lanes along the middle of the Strait. Iranian mine-laying during the war has now made such passage unsafe according to the IMO.
Would other countries accept imposition of fees in Hormuz?
No such unilateral move to demand fees to traverse a strait has been made in modern history, shipping industry officials said.
Oman has held dialogue with Iran on the issue. It issued guidance last month for vessels transiting the Strait through its water that did not require any fees.
Gulf states, whose main access to the high seas for their vital energy exports lies through the Strait, are particularly concerned about fees.
Major consumers of Gulf energy products and fertilizers may also be alarmed, especially by Trump's proposal for a 20% surcharge on cargoes. That could push up global oil prices significantly.
Iran vows to maintain control of Strait 'under any circumstance'
This comes as a member of Iran’s National Security Commission, in an interview with the Iranian semi-official news agency Tasnim on Tuesday, vowed that Iran will resist external influence over the waterway's future.
“We will not lose the Strait of Hormuz under any circumstances; even if a difficult war is ahead, we will resist there,” he stated.
The National Security Commission member also claimed that the US will not have the ability to compete with Iran in that arena, “despite all of Trump's fantasies.”