Oil tankers used to sail down the middle of the Strait of Hormuz.
But since Feb 28, any seeking to cross the 21-mile-wide waterway have had to take a detour.
In what has become known as the “Tehran Tollbooth”, vessels must now head closer to the Iranian coastline, nosing themselves between the islands of Qeshm and Larak.
Ship owners then go through a complex – and expensive – process of negotiation.
First, according to Bloomberg, they are required to inform intermediary companies linked to the Islamic Revolutionary Guards Corps (IRGC) of the ship’s cargo, destination and ultimate owner.
Iran then charges a “toll” of at least $1 per barrel, with the rate rising according to the perceived friendliness of the national operator.
Fees must be paid in Chinese yuan, or a cryptocurrency. The average rate for a single oil tanker is $2m (£1.5m). If everything is approved, IRGC boats will finally provide an escort into and out of the “tollbooth”.
A giant banner hanging in Enghelab Square in Tehran reads: ‘The Strait of Hormuz will remain closed; the entire Persian Gulf is our hunting ground’ – Fatemeh Bahrami/Anadolu via Getty
This system – informal and illegal for now – represents Iran’s biggest win from the war with the United States. It is now the target of the two-week ceasefire announced by Donald Trump. The US President has stated that the pause in fighting is strictly “subject to” the “COMPLETE, IMMEDIATE, and SAFE OPENING” of the Strait of Hormuz.
However, Iran’s statement said that any crossing had to be carried out “in conjunction” with the Iranian military – something very different to free passage – and an Iranian official told AP that the deal allowed Tehran to still charge fees.
The next two weeks will see which system holds.
Left in place, the tollbooth could earn a vengeful rogue state hundreds of billions of dollars and fundamentally reshape both the Middle East and maritime trade around the world.
That prospect makes its long-term survival unlikely, analysts told The Telegraph.
“Iran has learned how to keep the global economy in a hostage situation,” said Petras Katinas, a research fellow at the London-based Royal United Services Institute think tank.
2503 Hormuz tankers redirected
At moments, Donald Trump has appeared to be attracted by the idea of operating the toll booth himself, rather than opening up free passage.
“What about us charging toll?” he said this week. “I’d rather do that than let them have them. Why shouldn’t we? We’re the winner. We won.”
Gulf nations are concerned that Mr Trump will prompt a final, furious round of regional bombardments and then walk away with the strait – at least temporarily – under Tehran’s control.
Some countries might be forced to pay the export toll at first, one Gulf diplomatic source told The Telegraph.
Abu Dhabi, Qatar and Bahrain lack alternative pipelines, and supplies of liquid natural gas can only be delivered by ship.
Nations like India might send their own tankers through the strait to collect oil and gas, bearing the “tollbooth” cost themselves.
But over time, the Gulf nations will not tolerate a system that funnels vast wealth towards a hostile regime that has already blown up chunks of their critical infrastructure, the diplomatic source said.
0304 Strait of Hormuz traffic
Hugo Dixon, a columnist for Reuters, estimated that Tehran could earn $500bn over the next five years, creaming off profits for as long as it takes to construct new pipelines.
Even a fraction of that sum would slingshot the Shia nation to regional dominance. It would allow the IRGC to rebuild, many times over, its obliterated military.
“I don’t think this war can end if Iran is still running the ‘tollbooth’,” said Ellen R. Wald, a non-resident senior fellow at the Atlantic Council’s Global Energy Centre, based in Washington DC.
She said that “Saudi Arabia and the United Arab Emirates and other Gulf countries cannot stand for it” and would eventually “have to build an army and fight”.
In the near term, Iran’s enemies could use their own missiles to target the regime’s shadow fleet tankers, which are now transporting double the amount of oil they were before the war – and for almost double the profit.
On Wednesday morning, if not before, the world will find out whether Mr Trump followed through on his threat to destroy Iran’s “entire civilisation” without a deal to reopen the strait.
If he did not, there is no road left to take in terms of rhetorical threats, and the likeliest route out of the conflict becomes a quick and dirty deal that leaves Tehran in some form of control.
Donald Trump has suggested European nations should be the ones to police the strait as America does not need to import oil – Maxine Wallace/The Washington Post/Getty
Recently, Mr Trump suggested that the United States had no need to reopen the strait, given bountiful domestic energy supplies. Oil-starved Europe should do the job itself, he said.
But US super-majors, including Chevron, are heavily involved in the Gulf oil business, often running partnerships, and a permanent Iranian “tollbooth” would seriously undermine the international principle of the freedom of the seas, said Ms Wald.
Under the United Nations Convention on the Law of the Sea, no country can interfere with the “innocent passage” of ships through maritime choke points or straits. Tolls can only be charged at man-made canals, such as the Suez or Panama.
Last month, in a letter to the International Maritime Organisation, Iran argued that its “tollbooth” was justified by self-defence. It had to inspect foreign, possibly hostile ships and the fee covered such costs, the regime told the watchdog.
Turkey charges a small fee to escort ships through the Dardanelles, but “that’s because it’s a very perilous waterway and Turkey provides coastguard services,” said Ms Wald. Iran’s legal claim was absurd, by contrast, resting simply on extortion.
“The United States entered World War One in part to secure freedom of the seas,” Ms Wald added. “Leaving the tollbooth in place now would be like saying, ‘We don’t care about that any more – Britain, you can charge people to enter the English Channel’.”
In a worst-case scenario, the law of the sea breaks down and Russia or China take greater control over the choke points in their back yards.
Inside Iran, the IRGC would use oil funds to supercharge its ongoing takeover of the entire state, said Dr Andreas Krieg, a senior lecturer at the School of Security Studies at King’s College London.
While the overall level of traffic through the strait would fall – sanctions bar Western firms from engaging in any business with the IRGC – the tollbooth windfall “would help to build a military dictatorship”.
The IRGC would emerge as a “more radical, more empowered, more financially robust system that can go and build networks east with Russia and China”.
The prospect is catastrophic enough for so many nations that it is more likely to collapse than be allowed to take root, said Basil Germond, a professor of international security at Lancaster University.
“Historically, attempts to condition or close strategic straits – including Hormuz in the 1980s ‘tanker war’ – tend to prompt escalation … involving the use of force,” he said.
Whether it is seizing Kharg Island, further US bombardments or Gulf counterstrikes, “it is more likely that the quagmire will resolve with further use of kinetic force, rather than the implementation of a stable, widely accepted and enforceable tollbooth”.