19JUL

Oman's Hormuz fee splits its authors

3 min read

14:05UTC

Oman handed the US a plan to charge "service fees" for Strait of Hormuz passage; Iran's Gharibabadi calls the same charges compulsory, and the White House says Iran cannot toll an international waterway.

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Key takeaway

Oman and Iran describe one Hormuz fee in opposite terms, with the toll-free window expiring in August.

Oman handed the United States and its allies a written proposal for running the Strait of Hormuz on 30 June, according to a regional diplomat and a US source ¹. The plan would let shipping companies pay "service fees", explicitly not tolls, modelled on the voluntary contributions vessels make in the Malacca and Singapore Straits ². Hormuz carries roughly a fifth of the world's seaborne oil, so who charges for passage and on what basis is a question with global freight costs attached. The proposal is not finalised, and US negotiators have concerns they mean to raise with Muscat ³.

Three parties now describe one waterway in three ways. Oman calls the charges voluntary; Iran's deputy foreign minister Kazem Gharibabadi calls them compulsory and warns of unilateral action if the talks fail ⁴. Washington rejects both readings: White House spokeswoman Anna Kelly said "Iran cannot toll the strait, which is an international waterway" ⁵, restating the zero-fees line Marco Rubio and the Gulf states set out in Manama days earlier .

The Islamabad memorandum of 16 June set 60 days of toll-free passage, and Oman's fees would take over once that window and the US oil licence, General License X, both lapse in the third week of August . Tehran says it is covering the cost of the current free window from its own Treasury, though Middle East Eye's reading of the memorandum text finds it names no cost-bearer, only Iran's "best efforts" ⁶⁷.

The Malacca and Singapore model Oman copied runs on voluntary user contributions administered by a private Japanese foundation, with no power to compel a ship to pay. Grafting that onto a strait where a co-signatory calls the fee mandatory imports the ambiguity rather than settling it. Abbas Araghchi's claim of Iran's "sole" oversight was always rhetoric: the same memorandum gave Oman an equal seat and a joint fee committee , and its two authors now cannot agree what their own instrument means.

Deep Analysis

In plain English

The Strait of Hormuz is the narrow sea passage between Iran and Oman that roughly a fifth of the world's oil moves through. Oman has proposed that shipping companies using the strait pay a voluntary fee, similar to how ships already pay towards patrol costs in the Malacca Strait between Malaysia, Indonesia and Singapore. Iran says the same fee should be compulsory, and its deputy foreign minister has warned Iran could act on its own if it isn't. The White House says no country can charge ships just for passing through an international waterway. The dispute is really about who has the authority to charge for using the strait at all, and neither side has published an actual price.

Deep Analysis

Root Causes

Muscat ratified UNCLOS in 1989, and Article 26 of that treaty bars any charge on foreign ships for the mere act of passage through a strait. Oman's 'voluntary contribution' label keeps its proposal inside the treaty Muscat is bound by, rather than the mandatory toll Article 26 would forbid.

Iran signed UNCLOS in 1982 but never ratified it, so the same prohibition does not bind Tehran. That is why Iran's deputy foreign minister can call an identical fee 'compulsory' without contradicting any treaty obligation of his own government.

Escalation

Iran's 'unilateral action' warning follows a pattern the topic has already established. Verbal threats over the Hormuz corridor preceded the actual IRGC strikes on the Ever Lovely and Kiku , both hit within 48-72 hours of a warning about the same southern lane . On that base rate this is not an idle threat, though the target this time is a fee dispute rather than a routing dispute.

What could happen next?

Risk
Iran's threat of unilateral action over the fee dispute follows the same warning-then-strike pattern seen with the Ever Lovely and Kiku attacks, raising the chance of a fresh IRGC move against shipping within days rather than weeks.
Precedent
If shippers adopt Oman's voluntary model while ignoring Iran's compulsory version, Hormuz ends up running two competing fee regimes on one waterway, an outcome with no clean precedent at any other strait.

Source Landscape

This story draws on neutral-leaning sources from United States and United Kingdom

United States

United Kingdom

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Primary parallel: The Malacca Strait Patrol, funded voluntarily by user states and Japan's Nippon Foundation since 2007, cut recorded piracy incidents from dozens a year at its 2004 peak to near zero within a decade, precisely because no littoral state tried to make payment compulsory.

Counter-parallel: Egypt's Suez Canal runs the opposite model. Cairo has set and collected mandatory tolls since nationalising the canal in 1956, generating roughly $9 billion a year today because the 1888 Convention of Constantinople recognised Egypt's sovereign administration. Iran's 'compulsory' language borrows Suez's authority model while Oman's proposal borrows Malacca's voluntary one, and the two cannot both govern the same strait.

Consensus view: Chatham House's Sanam Vakil notes the Malacca Strait funding model works because Indonesia, Malaysia and Singapore jointly administer it and none is adversarial to the shippers who pay. Oman's proposal borrows the funding mechanism but not that shared custodianship, which is why Muscat pitched it to Washington's allies rather than to Tehran.

Counter-view: Tehran's Center for Strategic Research, a body linked to Iran's Expediency Council, argues Iran holds coastal jurisdiction under its own 2024 maritime law and can set toll terms unilaterally. It frames Oman's 'voluntary' language as a US attempt to avoid recognising Iranian authority over the strait's northern channel.

Key tension: Whether a fee scheme can function at all without Iranian sign-off, since a large share of Hormuz's navigable channel runs through waters Iran claims as its own.

First Reported In

Update #142 · Doha: three stories, no signed paper

CNN· 1 Jul 2026

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Causes and effects

Caused by

Iran and Oman claim the strait

Oman's formal fee proposal operationalises the joint fee committee the Muscat statement created, immediately splitting the two signatories over its terms.

Occurred 23 Jun 2026

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Iran claims sole control of Hormuz

Oman's proposal and the joint fee committee undercut Araghchi's claim of Iran's sole Hormuz oversight.

Occurred 27 Jun 2026

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Rubio lands in UAE: no Hormuz tolls

The White House's rejection of Oman's fees restates the zero-fees line Rubio and the GCC set in Manama.

Occurred 23 Jun 2026

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The August trap: three clocks, one week

Oman's fee proposal is the mechanism meant to take over once the free-passage window and General License X both lapse in August.

Occurred 22 Jun 2026

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This Event

Oman's Hormuz fee splits its authors

The two authors of the Hormuz deal now disagree over whether transit fees are optional, with the free-passage window set to lapse in August.

Led to

Israeli drone kills four in Nabatieh

IRIB's 'Omani route' grievance traces to Iran's dispute with Oman's transit-fee proposal.

Occurred 5 Jul 2026

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Different Perspectives

International Group of P&I Clubs

The Group has kept its Hormuz war-risk exclusion in force through the entire shipping recovery, even as London hull war-risk premiums fell to about 2% of vessel value. A burning LNG carrier off Limah is now the fresh case for holding that line, with mutual pooling meaning one hit reprices the strait for every owner at once.

Jordan

Jordan's government said no threats existed at Aqaba hours before Iranian missiles landed there, and has not addressed the IRGC's claim that Jordanian civilians and soldiers supplied targeting intelligence for the strike. Amman hosts forces it does not command and is saying as little as it can.

United States (CENTCOM)

The Pentagon named two of the seventeen American dead, 1st Lieutenant Tyler Feehan and Private Isabella Gonzales, both killed at Jordan's Muwaffaq Salti Air Base, days after its Amman embassy had warned citizens away from Aqaba's airport and seaport. Washington is naming its own cost while flagging threats it declines to attribute publicly.

Iran

Iran said on Monday it disabled two oil tankers crossing the Strait of Hormuz without its permission, asserting a right to license passage through the strait it borders. Tehran named neither vessel, and CENTCOM had already denied a comparable Iranian claim on 18 July.

Qatar

Qatar moved from summoning Iran's deputy ambassador on 8 July to a dated written claim at the UN Security Council thirteen days later, citing Resolution 2817 and reserving its Article 51 right of self-defence. Doha is building a permanent record while still hosting CENTCOM's forward headquarters and mediating with Tehran.

CENTCOM

CENTCOM confirmed a third American service member died in northern Iraq on 19 July clearing unexploded ordnance from a downed Iranian drone, and recovered unidentified remains at Muwaffaq Salti Air Base in Jordan. The Pentagon has framed its Khuzestan strikes as degrading IRGC capacity, a rationale that stretches to explain a reactor foundation with no nuclear material in it.