Oman has put forth a new service fee system for ships transiting the Strait of Hormuz, aiming to reconcile international maritime law with Iran's strategic leverage, a concept underscored by its wartime blockade that significantly impacted global energy prices. This proposal, which could redefine the strait's management, suggests a framework where bordering states cooperate to provide essential services like navigational safety and environmental protection, with users contributing to costs, as permitted by Article 26 of the UN Convention on the Law of the Sea. While Oman, drawing parallels to the Strait of Malacca model, advocates for voluntary contributions to fund these services, Iran insists on compulsory payments, differing starkly on the potential revenue, with Iran envisioning up to $40 billion annually compared to Malacca's modest figures. The U.S. has rejected the proposal, deeming any fees unacceptable and threatening sanctions, while European nations are adopting a more pragmatic stance, prioritizing compliance with international law and acknowledging the potential necessity of incorporating some Iranian influence for successful negotiations, though neighboring Gulf states remain apprehensive about accepting new arrangements post-conflict, and the overall security situation in the strait remains substantial.

Oman has put forth a new service fee system for ships transiting the Strait of Hormuz, aiming to reconcile international maritime law with Iran's strategic leverage, a concept underscored by its wartime blockade that significantly impacted global energy prices. This proposal, which could redefine the strait's management, suggests a framework where bordering states cooperate to provide essential services like navigational safety and environmental protection, with users contributing to costs, as permitted by Article 26 of the UN Convention on the Law of the Sea. While Oman, drawing parallels to the Strait of Malacca model, advocates for voluntary contributions to fund these services, Iran insists on compulsory payments, differing starkly on the potential revenue, with Iran envisioning up to $40 billion annually compared to Malacca's modest figures. The U.S. has rejected the proposal, deeming any fees unacceptable and threatening sanctions, while European nations are adopting a more pragmatic stance, prioritizing compliance with international law and acknowledging the potential necessity of incorporating some Iranian influence for successful negotiations, though neighboring Gulf states remain apprehensive about accepting new arrangements post-conflict, and the overall security situation in the strait remains substantial.

Oman has put forth a new service fee system for ships transiting the Strait of Hormuz, aiming to reconcile international maritime law with Iran's strategic leverage, a concept underscored by its wartime blockade that significantly impacted global energy prices. This proposal, which could redefine the strait's management, suggests a framework where bordering states cooperate to provide essential services like navigational safety and environmental protection, with users contributing to costs, as permitted by Article 26 of the UN Convention on the Law of the Sea. While Oman, drawing parallels to the Strait of Malacca model, advocates for voluntary contributions to fund these services, Iran insists on compulsory payments, differing starkly on the potential revenue, with Iran envisioning up to $40 billion annually compared to Malacca's modest figures. The U.S. has rejected the proposal, deeming any fees unacceptable and threatening sanctions, while European nations are adopting a more pragmatic stance, prioritizing compliance with international law and acknowledging the potential necessity of incorporating some Iranian influence for successful negotiations, though neighboring Gulf states remain apprehensive about accepting new arrangements post-conflict, and the overall security situation in the strait remains substantial.

Oman has proposed a new system of service fees for ships transiting the Strait of Hormuz, offering what it hopes will be a compromise between international maritime law and Iran's insistence that its strategic leverage over the world's most important energy chokepoint cannot simply disappear after the recent war. The proposal, which was first reported by the New York Times, could fundamentally reshape how the strait is managed in future.

The plan reflects a new geopolitical reality. Before the conflict, the Strait of Hormuz functioned as an open international shipping route carrying nearly one-fifth of the world's seaborne oil. During the war, however, Iran effectively blockaded the waterway, sending energy prices soaring and demonstrating its ability to disrupt the global economy. That episode convinced many governments that the pre-war status quo of completely unrestricted transit is unlikely to return. Negotiations have therefore shifted towards finding a framework that preserves commercial shipping while acknowledging Iran's influence over the strait.

Oman, which has long been a trusted mediator between Iran and the West, is trying to reconcile two competing visions about the strait’s future. Iran expects to retain formal control over the waterway, while the US says freedom of navigation through the strait must remain intact. Oman is proposing a middle path. Article 26 of the United Nations Convention on the Law of the Sea says that states cannot impose tolls on ships exercising the right of transit passage through international straits. The article, however, allows bordering states to cooperate in providing services such as navigational safety, environmental protection and emergency preparedness, with users contributing towards the associated costs.

Omani Foreign Minister Badr al-Busaidi argues that the proposed payments would fund precisely these services rather than charge vessels merely for passing through the strait. According to Muscat, financing navigational aids, pollution control measures and maritime emergency infrastructure is consistent with international law.

To strengthen its case, Oman cites the Strait of Malacca and Singapore, where governments and shipping companies make voluntary contributions to a fund managed through a Japanese foundation to improve navigational safety. Arsenio Domínguez, secretary general of the International Maritime Organisation, has acknowledged that while mandatory tolls would violate freedom of navigation, a voluntary funding arrangement based on the Malacca model could provide a workable solution.

Despite that legal framework, a major disagreement remains between Oman and Iran. Muscat insists the payments must be voluntary, thereby preserving the principle of free navigation. Tehran, however, has made clear that it considers the payments compulsory. Iranian deputy foreign minister Kazem Gharibabadi has publicly stated that ships using the strait would be required to pay.

The gap is equally evident in their financial expectations. The Malacca navigation fund has collected only about $23 million over the past 15 years. Iran, by contrast, believes a Hormuz charging system could generate as much as $40 billion annually. Supporters argue that a surcharge of around one dollar per barrel on oil tankers would impose only a modest cost compared with the economic consequences of another blockade or a prolonged military conflict.

For Tehran, however, the proposal is about far more than revenue. Iran regards control of Hormuz as one of its most valuable strategic assets and has repeatedly indicated that it has no intention of relinquishing that leverage. Some analysts believe the Omani initiative is designed to offer Washington a face-saving compromise. By sharing administration of the system with Oman and presenting the payments as voluntary service contributions rather than Iranian tolls, the United States could argue that it has not rewarded Tehran for its military actions.

The Trump administration has nevertheless rejected the proposal outright. President Donald Trump has described any system of fees or tolls as unacceptable and reportedly warned Oman against cooperating with Iran on such an arrangement. Treasury Secretary Scott Bessent has threatened sanctions against Muscat if it assists in implementing the scheme, while Secretary of State Marco Rubio has insisted that the United States opposes monetising the strait regardless of the terminology used. Washington continues to demand a complete return to unrestricted navigation.

European governments have taken a more pragmatic approach. Although many initially opposed the proposal, their focus has shifted towards ensuring that any eventual arrangement complies with international maritime law. Many European diplomats believe acknowledging some degree of Iranian influence may be necessary if negotiations are to succeed and commercial shipping is to continue without further disruption.

Neighbouring Gulf states remain unconvinced. Saudi Arabia, whose oil exports depend heavily on the strait, has criticised the proposal, arguing that regional countries should not be forced to accept an entirely new arrangement created by the recent conflict.

Meanwhile, the security situation remains fragile despite a temporary peace framework between Washington and Tehran guaranteeing 60 days of unrestricted commercial navigation. The Joint Maritime Information Center continues to classify the threat in the Strait of Hormuz as substantial because of sea mines, unexploded ordnance and ongoing clearance operations.

Iran has also adopted a maximalist interpretation of the ceasefire. It insists only Tehran has the authority to lift the blockade, has rejected foreign mine-clearing operations and recently attacked a Singaporean cargo vessel attempting to use a UN-backed shipping corridor through Omani waters, forcing the International Maritime Organisation to abandon plans for the alternative route.

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