Iran & Oman Move Ahead With Strait Of Hormuz Shipping Fee Plan Despite US Opposition

Iran and Oman are moving ahead with a proposal to introduce payments for commercial ships using the Strait of Hormuz, despite continued opposition from the United States, as talks continue over the future of one of the world’s most important shipping routes after the recent US-Iran conflict.

According to The New York Times, Oman has submitted a formal proposal to the United States and several Western countries outlining a framework under which ships transiting the Strait of Hormuz would pay service-related fees.

The proposal has become one of the main issues in ongoing US-Iran negotiations aimed at reaching a permanent peace agreement.

Before the conflict, commercial ships passed through the Strait of Hormuz without paying any transit charges.

During the war, however, Iran effectively blockaded the waterway, disrupting global shipping and pushing crude oil prices sharply higher. Since then, Iranian officials have repeatedly said the strait will not return to its pre-war system.

Diplomatic sources told The New York Times that Oman’s proposal is meant to create a joint framework for managing the waterway instead of allowing Iran to introduce its own payment system.

If adopted, it would mark a major change from decades of free commercial passage through the strategic shipping route.

US opposes shipping charges

The proposal has already been shared with US negotiators, who are expected to discuss their concerns with Omani officials.

A person familiar with the US position said Oman’s proposal describes the payments as voluntary service fees rather than mandatory tolls.

The United States has repeatedly said commercial navigation through the Strait of Hormuz should remain free. President Donald Trump has called the idea of charging ships “unacceptable.”

Earlier, after reports emerged that Oman was discussing a fee collection system with Iran, Trump also threatened military action against Oman if it did not “behave just like everybody else.”

US Secretary of State Marco Rubio also rejected the proposal during a visit to Bahrain last week, saying Washington would oppose any system that requires ships to make payments, regardless of whether they are called fees, tolls or voluntary donations.

“We need to get back to what the straits looked like before this conflict,” Rubio said.

Despite those differences, the person familiar with the US position said Washington values its relationship with Oman and believes the issues can still be resolved through technical discussions.

Iran says pre-war system will not return

Iran has made clear that it does not want the Strait of Hormuz to return to how it operated before the conflict.

Deputy Foreign Minister Kazem Gharibabadi said this week that Iran wants to reach an agreement with Oman. However, he warned that Tehran would move ahead on its own if no joint framework is agreed.

Foreign Minister Abbas Araghchi has also said the waterway will not return to its pre-war operating model.

Mehdi Mohammadi, a senior adviser to Iran’s lead negotiator with the United States, said the name given to the payments does not matter.

“There is no free service anywhere in the world,” he said.

Voluntary or mandatory?

One of the biggest disagreements is whether ships would be required to pay.

According to diplomats, Oman’s proposal is based on the system used in the Strait of Malacca and the Singapore Strait, where a Japanese foundation collects voluntary contributions from governments, shipping companies and industry groups to support navigation safety and emergency response.

US officials familiar with the proposal said Oman is suggesting a similar voluntary model.

Iran, however, wants the payments to be mandatory, making it one of the main issues still under negotiation.

The debate comes after the United States and Iran signed a temporary peace agreement earlier this month.

The agreement guarantees free passage for commercial ships through the Strait of Hormuz for 60 days while both sides negotiate a permanent arrangement.

It also requires Iran and Oman to begin talks on the future management of the waterway after that period.

According to Iranian state media, those discussions are expected to begin within days and will include shipping routes, navigation arrangements and possible service fee systems.

Last week, Oman and the International Maritime Organization (IMO) announced a safe navigation corridor that passes entirely through Omani territorial waters.

Soon afterwards, Iran attacked a cargo ship in the strait, prompting the IMO to suspend an operation to assist hundreds of commercial vessels stranded in the area.

The proposal has also raised concerns among Western governments and Gulf countries that rely on the Strait of Hormuz to export oil and natural gas.

IMO Secretary-General Arsenio Dominguez said any toll system that limits freedom of navigation through international waterways would not comply with international law.

However, he said a voluntary funding arrangement similar to the one used in Southeast Asia could be possible.

Oman’s Foreign Minister Badr al-Busaidi has said his country is not proposing transit tolls. Instead, he has distinguished between charging ships simply for passing through the strait and voluntary payments for services such as maritime safety, emergency response and pollution control.

Saudi Foreign Minister Prince Faisal bin Farhan also questioned whether the recent conflict should permanently change how the Strait of Hormuz operates.

References: IndiaToday, Business Standard