TEHRAN/RIYADH – Iran has moved to solidify its control over the Strait of Hormuz, imposing de facto transit fees on commercial vessels, a development sharply condemned by the Gulf Cooperation Council (GCC) as a violation of international law. The strategic waterway, through which approximately 20 percent of global oil and natural gas supplies normally pass, has become a critical geopolitical bargaining chip for Tehran amid the ongoing US-Israel war on Iran, triggering a severe global energy crisis and raising warnings of a looming recession.
Since the US-Israel war on Iran began on February 28, 2026, Iran has effectively disrupted traffic through the Strait, culminating in accusations from GCC Secretary-General Jasem al-Budaiwi on March 26, 2026, that Iran is now charging ships for safe passage. This "toll booth" regime, described by Lloyd's List Intelligence, has seen some vessels reportedly pay up to $2 million per voyage, often in Chinese yuan, to navigate the passage. Iran's parliament is reportedly drafting a bill to formalize these fees, asserting the nation's sovereignty and seeking to create a revenue stream to offset war costs.
The economic fallout is immediate and widespread. Brent crude oil prices have surged over 40 percent since the conflict's inception, reaching $104 per barrel by March 26, 2026, contributing significantly to global inflationary pressures. The Organization for Economic Cooperation and Development (OECD) warned that US headline inflation could hit 4.2 percent in 2026, with the G20 group facing 4 percent inflation, revising previous forecasts upward. Global GDP growth is projected to slow to 2.9 percent.
The GCC's al-Budaiwi explicitly stated that Iran's imposition of transit fees is illegal and constitutes a direct violation of the UN Convention on the Law of the Sea (UNCLOS). Unlike man-made canals such as Suez or Panama, which legally charge tolls, natural international straits like Hormuz are governed by UNCLOS provisions that prohibit such fees and ensure the right of transit passage for all vessels. Despite this, Iran has reportedly differentiated treatment based on perceived political alignment, allowing some "politically neutral" or Chinese-linked ships to pass after vetting, while blocking those perceived as supporting US and Israeli war efforts.
Beyond energy, critical global supply chains are experiencing severe disruptions. The agricultural sector faces a potential food crisis, as approximately one-third of global fertilizer trade, particularly nitrogen and phosphate-based products, typically transits the Strait. Urea prices have already climbed nearly 30 percent, and with major Gulf region gas fields – essential for nitrogen fertilizer production – severely damaged in the conflict, the recovery of supply chains could take months. Farmers globally are confronting unprecedented costs, with some in the US considering planting less nitrogen-intensive crops like soybeans over corn.
Further compounding the crisis, global helium supplies are under strain following Iranian attacks on Qatar's Ras Laffan industrial city, a significant helium producer. Helium, a critical component for cooling MRI machines, aerospace applications, and semiconductor manufacturing for AI, faces tightening markets and potential delays in medical diagnostics worldwide.
The escalation in the Strait of Hormuz underlines a deepening impasse in the broader US-Israel war with Iran. Tehran has rejected US-led ceasefire proposals, instead presenting its own five-point plan that reportedly includes demands for reparations and recognition of its sovereignty over the Strait. As diplomacy falters, the United States has continued to deploy additional military forces to the region, and US Central Command has vowed to "completely eliminate Iran's wider military apparatus." The international community watches for further economic repercussions and potential military escalation, with the fate of global commerce inextricably linked to the volatile dynamics of this critical maritime choke point.
ISN MEDIA
