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Deal bans the Hormuz toll, licenses its replacement

3 min read
10:53UTC

The published memorandum bans tolls on Hormuz passage, then invokes UNCLOS Article 26(2) to recast the IRGC's toll body as an Iran-Oman provider of maritime services, with a charge-free window of only 60 days.

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Key takeaway

Iran agreed to drop the toll for 60 days and kept the legal machinery to switch it back on.

The Islamabad Memorandum of Understanding (MoU) text, published 17 June, bans "tolls" on Strait of Hormuz passage, then invokes the UN Convention on the Law of the Sea (UNCLOS), Article 26(2), to recast the charges as "maritime navigation services" 1. That article forbids fees on innocent passage but permits charges for specific services rendered to a ship, so a renamed toll becomes lawful revenue. Management is handed jointly to Iran and Oman, and the charge-free window runs 60 days only.

The body collecting the money does not go away. The Persian Gulf Strait Authority (PGSA), the body Iran's Revolutionary Guard (IRGC) created on 5 May that levied up to $2 million per tanker , is not dissolved under the deal. It survives under a quieter label, the 60-day clock counting down to the charge's return. Iran asserted Hormuz sovereignty and collected paid passage as early as 15 June, foreshadowing the framing the text now formalises .

Iran's foreign minister Abbas Araghchi put it plainly: "Charges for services provided will be collected," naming navigation, environmental protection and insurance. Counting from a signing date of roughly 15-16 June, the fees could resume as early as mid-August. The party with the largest exposure to those fees, Saudi Arabia, holds no seat in the Iran-Oman mechanism that will set them.

Deep Analysis

In plain English

The ceasefire deal said Iran would stop charging ships to pass through the Strait of Hormuz. But it only said so for 60 days. After that, Iran can restart the charges under a different name. Instead of calling them 'tolls' , a word the deal bans , Iran will call them 'maritime navigation services fees', citing a section of international maritime law. Think of it as a motorway toll renamed a 'road maintenance contribution.' The underlying charge is the same; the label has changed. The legal argument is questionable, but Iran has 60 days before it matters. By then, the deal will either be extended or collapsed on other grounds.

What could happen next?
  • Precedent

    The UNCLOS Article 26(2) rebranding, if unchallenged, sets a template for any state controlling a maritime chokepoint to levy transit charges under a services-fee framing that avoids the political label of 'toll.'

    Medium term · Reported
  • Risk

    Saudi Arabia's four idle supergiant fields face annual fee liability of up to $2 billion once the 60-day window closes, with no voice in the fee-setting mechanism. Riyadh's 26-day public silence on the MOU may break as the mid-August charge-resumption date approaches.

    Medium term · Reported
  • Opportunity

    The 60-day grace period gives shipping companies, P&I clubs, and international maritime lawyers a window to file UNCLOS arbitration claims testing the services-fee framing before charges resume.

    Medium term · Suggested
Sources:Al Jazeera·Times of Israel
Mentions:Abbas Araghchi →UN Convention on the Law of the Sea →Persian Gulf Strait Authority →Iran →Oman →Islamabad Memorandum of Understanding →Strait of Hormuz →Jakarta →Islamabad →Persian Gulf →US Navy →Indonesia →Panama →Tehran →Saudi Arabia →
First Reported In

Update #131 · Iran deal's first death tests the text

Al Jazeera· 18 Jun 2026
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Causes and effects
Caused by
Iran and US name Hormuz two ways
Iran's prior assertion of Hormuz sovereignty and paid passage foreshadowed the MOU's toll-ban workaround via UNCLOS Article 26(2).
Occurred 15 Jun 2026
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This Event
Deal bans the Hormuz toll, licenses its replacement
The same paragraph that bans the toll writes the legal route to bring it back.
Led to
Oil prices a Hormuz reopening that has not happened
The 60-day-only toll-free window with PGSA surviving means the Brent rally pricing a permanent reopening may reverse when the window closes.
Occurred 18 Jun 2026
Read story →
Iran builds an insurance toll for August
The UNCLOS Article 26(2) maritime-services framing established in the MOU text is the legal door Iran's PGSA walked through with the compulsory-insurance mandate.
Occurred 20 Jun 2026
Read story →
Different Perspectives
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