15JUN

Iran's strait authority opens to silence

4 min read

11:33UTC

The Persian Gulf Strait Authority opened registration via info@pgsa.ir on 6 May, requiring vessels to email destination, flag history, cargo value and crew nationalities; not one of the 2,000-vessel stranded fleet has registered.

← Back to Longs rebuilt into an 8-week Brent low Jump to analysis ↓

EconomicDeveloping

Key takeaway

Iran built a permitting body the US has prohibited paying for, and zero vessels have tested either side.

Iran's Persian Gulf Strait Authority (PGSA), the permitting body Tehran created on 5 May , opened registration through info@pgsa.ir on Wednesday 6 May 2026. Vessels must email ship destination, flag history, cargo value and crew nationalities to enter the queue ¹. The PGSA has recorded interest from 0.0 per cent of the 2,000-vessel stranded fleet, despite the Islamic Revolutionary Guard Corps Navy (IRGC Navy) posting a same-day X statement promising "safe, stable passage through SOH" ².

Fearnleys Shipbrokers told the trade press that owners need observable evidence of actual transits before they will file a registration email, citing previous false starts. BIMCO, the global shipping association whose safety guidance underwrites most commercial routing decisions, has not updated its Hormuz advisory and will not until rules of transit are officially confirmed ³. Protection and Indemnity (P&I) cover, the war-risk insurance layer that determines whether tankers can lawfully enter The Gulf, remains unchanged.

The PGSA collides head-on with the Office of Foreign Assets Control (OFAC) General Licence W, the 1 May instrument that prohibits toll payments to Iranian authorities . Any vessel that pays the PGSA registration fee crosses an OFAC enforcement line; any vessel that transits without paying establishes the converse precedent that the Iranian permitting body is theatre. The MOU now in Tehran proposes a phased reopening over 30 days but does not name the PGSA, which leaves the document caught between two unenforceable readings: it either ignores Iran's domestic-law mechanism, or it implicitly accepts it and breaches GL-W.

Maritime permitting bodies live or die on insurance. Without a P&I club willing to write war-risk cover for vessels carrying a PGSA certificate, the Authority has no commercial existence regardless of how many emails it can send. Marco Rubio's 4 May Fox News rejection of any Iranian transit fee set the US enforcement floor; Treasury Secretary Scott Bessent has pressed Beijing publicly on Hormuz cooperation but has named no mechanism that would let Chinese refiners pay the PGSA without triggering OFAC action. The first vessel to file with info@pgsa.ir would set the market precedent, and at zero registrations, the file is empty.

Deep Analysis

In plain English

Iran set up a new office called the Persian Gulf Strait Authority and opened an email address on 6 May, inviting ships to register before using the Strait of Hormuz. The idea is that ships would email in their details, get permission, and then transit safely. The Iranian navy also posted on social media saying it would ensure safe passage. By 7 May, zero vessels from the 2,000-strong stranded fleet had registered. Ship owners need two things before they will move their vessels: insurance that covers them if something goes wrong, and certainty that paying Iran's registration fee will not get them sanctioned by the US government. The US Treasury specifically banned paying fees to Iranian maritime authorities under a 1 May order, and the major shipping insurance bodies have not changed their guidance. BIMCO, the global shipping association, said it will wait for official confirmation of new transit rules before advising any vessels to proceed.

Deep Analysis

Root Causes

The PGSA's zero-registration result on its first operational day reflects two overlapping structural constraints. First, OFAC General Licence W, issued on 1 May, explicitly prohibits toll payments to Iranian authorities, and any Western-insured vessel whose owner pays a PGSA fee becomes an OFAC enforcement target.

The fee-payment prohibition is not an advisory; it is a designated violation under Executive Orders 13902 and 13846. The PGSA registration form, as seen by Bloomberg, does not disclose a toll or fee structure, which may be deliberate: the authority may intend to collect the fee at a separate stage, maintaining the registration-only appearance to avoid triggering immediate OFAC scrutiny.

Second, Fearnleys Shipbrokers cited 'previous false starts' as the reason owners need observable evidence of actual transits before registering. Iran declared the strait 'completely open' on 17 April, with IRGC gunboats firing on an Indian-flagged tanker the next day. That episode established a trust deficit that a single-day IRGC Navy X posting cannot overcome, regardless of its content.

What could happen next?

Consequence
The first vessel to pay the PGSA fee and transit successfully will set the precedent that breaks the deadlock, but that vessel's owner faces simultaneous OFAC enforcement exposure and reputational risk from Western counterparties.
Short term · 0.75
Risk
The MOU delivered to Tehran on 7 May does not name the PGSA, leaving Iran's domestic-law permitting framework in place regardless of what the ceasefire agreement says about Hormuz reopening.
Short term · 0.8
Precedent
If the PGSA accumulates even a single successful registered transit, Iran establishes the precedent that domestic strait-state permitting bodies can operate in international waters without UNCLOS authorisation, regardless of what a subsequent peace agreement says.
Medium term · 0.6

Source Landscape

This story draws on mixed-leaning sources from United States and Iran (includes Iran state media)

United States

Iran

Primary parallel: The 1984 Nicaraguan harbour-mining case at the International Court of Justice established that a state's creation of a domestic maritime control body with unilateral enforcement powers in international waters is a violation of customary international law, but the ruling produced no enforcement mechanism and Nicaragua's mining continued for two years.

Iran's PGSA follows the structural pattern: a domestic-law body asserting international jurisdiction with enforcement powers, knowing that the ICJ route is too slow to affect the current conflict's timeline.

Counter-parallel: The 1974 Iceland fisheries case, in which Iceland extended its exclusive fishing zone to 50 nautical miles and created a domestic permitting body for access, produced a temporary commercial accommodation: British and West German fishing fleets paid informal fees to Icelandic authorities while the ICJ case proceeded.

The accommodation held for three years before the formal legal resolution. Iran may be betting that the same pattern applies at Hormuz: commercial vessels with no better option will eventually pay the PGSA fee, creating a fait accompli that formal legal challenge cannot undo quickly enough to matter.

The PGSA's commercial irrelevance on 6-7 May is directly measurable: 2,000 vessels stranded in The Gulf carrying an estimated 20,000 seafarers (mostly Filipino, Indian, and Bangladeshi nationals) represent a cargo value in the hundreds of billions of dollars at war-risk detention rates.

The Lloyd's market war-risk premium for Hormuz passage as of the 4 May UKMTO critical advisory ran to 5-10% of hull value per voyage, making a single VLCC transit cost the owner $15-30 million in war-risk cover alone, before cargo.

UKMTO upgraded the Hormuz advisory to critical tier on 4 May , raising the effective insurance floor for any vessel attempting transit without naval escort. The PGSA's email registration mechanism does not address the insurance constraint. A vessel that registers with info@pgsa.ir and transits does not acquire P&I cover; it acquires an email receipt from an Iranian state body whose legal standing is disputed.

The commercial paralysis the zero-registration figure represents is therefore not scepticism about the PGSA's authority per se but a rational insurance-market response to a situation where paying the fee creates OFAC exposure without solving the war-risk cover problem.

Consensus view: BIMCO's legal team and the International Group of P&I Clubs, whose combined guidance underwrites commercial routing decisions for roughly 90% of the world's ocean-going tonnage, have operated a consistent position since the P&I war-risk suspension of early March: no update to safety guidance until transit rules are confirmed by a recognised authority.

The PGSA's info@pgsa.ir registration mechanism is not a recognised authority in the P&I sense; it is an Iranian domestic-law body whose legal standing is disputed by every OFAC-compliant insurer.

Counter-view: Yoram Haftel at the Hebrew University's Department of International Relations, writing in EJIL:Talk!, argues Iran's naming choice is jurisprudentially precise: the Persian Gulf Strait Authority deliberately avoids the phrase 'Strait of Hormuz', removing itself from the UNCLOS Article 38 transit-passage framework that specifically prohibits strait-state permitting.

On this reading, the PGSA is not a transit authority in the UNCLOS sense at all but a Persian Gulf body asserting maritime jurisdiction, a legal category UNCLOS does not govern in the same way.

Key tension: Whether Western P&I clubs will ever write war-risk cover for vessels that have paid a PGSA registration fee, given that payment would constitute compliance with an Iranian authority OFAC General Licence W explicitly prohibits paying.

First Reported In

Update #90 · Pakistan carries paper; Brent below $100

Insurance Journal· 7 May 2026

Read original →

Causes and effects

Caused by

Iran names a Hormuz toll authority

Iran's creation of the Persian Gulf Strait Authority on 5 May directly produced the 6 May opening of PGSA vessel registration via info@pgsa.ir.

Occurred 5 May 2026

Read story →

OFAC ships paper, Trump signs Cuba

OFAC General Licence W's toll prohibition directly collides with the PGSA registration mechanism, explaining the commercial deadlock.

Occurred 1 May 2026

Read story →

OFAC issues GL-W on same Friday

OFAC GL-W's prohibition on toll payments to Iranian authorities is the regulatory instrument that prevents vessels from using the PGSA registration mechanism without violating US sanctions.

Occurred 1 May 2026

Read story →

This Event

Iran's strait authority opens to silence

An operational permitting body without an insurance market is a press release; BIMCO's continued silence is the leading commercial indicator that no shipper believes the IRGC Navy's safe-transit guarantee.

Different Perspectives

Sanctions compliance officer reviewing a Lukoil International GmbH bid

OFAC's amended FAQ 1224 gives a compliance desk its first published standard: full severance from Lukoil and a US-jurisdiction blocked account for sale proceeds. The conditions name neither ISAB nor Italy, so a Priolo Gargallo-linked bid answers a different question than a Neftochim Burgas or Petrotel Ploiesti one.

Managed-money funds on Brent Last Day

CFTC data for the week to 21 July showed managed money flipping 74,400 contracts to a net long of 15,665 against 1,410 short on the Brent Last Day contract, code 06765T. A fund that held that short through July has now covered it, and the spent short base raises the bar for the next leg higher.

Saudi crude exporters

Saudi-linked tanker transits through Bab el-Mandeb fell to about 7.5 a day after the 24 July underwriting withdrawal, pushing more barrels onto the longer route round the Cape or through the Yanbu terminal. Every diverted barrel ties up a ship for longer, and a fleet that turns slower charges more.

Tanker owners on the Bab el-Mandeb route

Lloyd's-market syndicates withdrew war-risk cover from Saudi-linked hulls on 24 July, leaving owners of that class of vessel to sail Bab el-Mandeb uninsured or not at all. Tanker transits on the route fell to roughly 7.5 a day, and cover, once withdrawn, does not return on a shipowner's timetable.

Eni

Eni's board approved second-quarter results on 29 July, swinging refining EBIT to a EUR0.08bn profit from a year-earlier loss even as group profit doubled, and named Red Sea freight cost as a cap on that improvement. A refiner absorbing higher shipping costs on Saudi-linked crude while its numbers improve treats the freight line as a drag, not a crisis.

Asian buyers (India, Japan, China, South Korea)

Asian refiners are absorbing 62% of Yanbu's 3.75m b/d flow, the bulk of Saudi Arabia's rerouted crude now clearing east rather than into the Atlantic basin. That destination split leaves Asian buyers more exposed to any single Yanbu-specific disruption than under the kingdom's normal multi-terminal export pattern.