Oman has found itself in a challenging geopolitical position following declarations from Tehran regarding a joint plan to manage the Strait of Hormuz and impose transit fees on commercial shipping. The Sultanate, which governs the Musandam exclave on the southern shore of this critical waterway, has traditionally maintained a policy of neutrality. However, recent assertions by Iranian officials have drawn the country into a direct confrontation between Iranian ambitions and Western maritime security interests.
The Strait of Hormuz is the world’s most vital maritime oil chokepoint, through which approximately one-fifth of global petroleum liquids pass. The waterway has been effectively obstructed for ten weeks following military strikes by the United States and Israel against Iranian targets in February.
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Iranian Claims of Sovereignty
In a recent address in India, Iranian Foreign Minister Abbas Araghchi asserted that the Strait consists entirely of Iranian and Omani territorial waters, claiming, “There is no international water in between.” Araghchi further stated that Tehran is collaborating with Muscat on a joint management framework for the future of the passage. While Iran has been vocal about these negotiations, Omani officials have remained silent regarding the specifics of the plan, particularly concerning the proposed collection of fees and the mandatory disclosure of vessel identities.
Western diplomats have condemned the Iranian proposal as illegal under international maritime law. The plan includes the establishment of the Persian Gulf Strait Authority (PGSA), an Iranian state entity founded on 5 May. This body aims to transform the strait into a revenue-generating asset by requiring ships to register via email for transit permits.
Financial and Legal Obstacles
The Iranian proposal introduces several contentious requirements for commercial shipping:
Transit Fees: A proposed charge of roughly $1 per barrel of oil.
Currency Restrictions: Fees must be paid in Iranian Rials.
Banking Requirements: Vessels may be required to open accounts in Rials, which Western authorities warn would violate United Nations sanctions, as payments could be directed to the Islamic Revolutionary Guard Corps (IRGC).
| Key Aspect | Iranian Proposal (PGSA) | International Maritime Norms |
| Legal Status | Shared Territorial Waters | International Strait (Transit Passage) |
| Transit Cost | ~$1 per barrel of oil | Free Transit for Innocent Passage |
| Currency | Iranian Rial | Major Global Currencies (USD/EUR) |
| Registration | Mandatory via PGSA Email | Standard IMO Regulations |
| Governance | Joint Iran-Oman Authority | UNCLOS / International Law |
International Opposition
The United States has firmly rejected the notion of paying tolls to end the blockade, asserting that Oman shares this view. In response to the Iranian initiative, the United Kingdom and France have presented an alternative maritime security plan to Oman, which has garnered support from most Gulf nations. High-ranking officials, including Lord Llewellyn, Political Director of the UK Foreign Office, and Arsenio Dominguez, Secretary-General of the International Maritime Organization (IMO), have recently visited Muscat to discuss the legality of the blockade.
Tehran’s legal justification rests on its refusal to ratify the 1982 United Nations Convention on the Law of the Sea (UNCLOS). Iran argues that it is only bound by customary international law, which it interprets as allowing the restriction of passage if its “sovereignty, territorial integrity, or political independence” is threatened.
The Role of Global Powers
The situation is further complicated by China’s involvement. Approximately 45% of China’s Iranian oil imports transit the strait. While US officials, including Donald Trump and Secretary of State Marco Rubio, suggest that Beijing opposes the tolls, the Chinese Foreign Ministry has focused primarily on ending the blockade caused by the regional conflict. Recently, the IRGC allowed several Chinese tankers to pass after they reportedly agreed to comply with Iranian regulations, though it remains unconfirmed if transit fees were paid.
The US has warned that any vessel paying these “illegal tolls” may face intervention by the US Navy, setting the stage for continued volatility in one of the world’s most sensitive shipping lanes.