23JUL

Iran names a Hormuz toll authority

3 min read

19:27UTC

Iran created the Persian Gulf Strait Authority on 5 May, requiring vessels to register, document and pay a transit toll before clearance; MARAD's advisory 2026-004 acknowledged the new regime in writing.

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Key takeaway

Pay the toll, breach OFAC; refuse the toll, face Iranian fire. Third-flag vessels have no lawful route.

Iran created the Persian Gulf Strait Authority on Tuesday 5 May, a named state body that requires vessels to register, complete documentation and pay a transit toll before receiving clearance to enter a designated corridor through the strait⁠¹. Deviation from the corridor, the authority states, triggers military intervention. MARAD (the US Maritime Administration) issued advisory 2026-004 acknowledging the new authority alongside the pre-existing 2026-001 advisory on Iranian seizures⁠². The advisory is the first written US-government recognition that Iran has produced an institution Washington's own posture cannot reconcile with.

Iran named the new body the 'Persian Gulf Strait Authority', not the 'Strait of Hormuz Authority', refusing the international-waterway designation that UNCLOS (United Nations Convention on the Law of the Sea) Article 38 attaches to the strait. Article 38 guarantees transit passage 'without prior authorisation' for ships of all flags. The new authority requires exactly that: a registered email contact, formal documentation, a paid toll, and adherence to a designated corridor before clearance is granted. The institutional architecture rests on the Majlis 12-article sovereignty law and Mojtaba Khamenei's 'new management' written claim.

The legal squeeze runs in both directions. OFAC's General Licence W, issued 1 May, names the Iranian Red Crescent, Bonyad Mostazafan and Iranian embassy accounts as toll-payment channels that trigger US sanctions exposure. A non-US-flagged tanker that pays the new Iranian toll to clear the corridor exposes itself to OFAC secondary sanctions; a tanker that refuses to pay risks Iranian military intervention. There is no lawful path for a third-flag vessel to comply with both regimes at once. The Northwood mission template, drafted by British and French officers on 22-23 April under UNCLOS transit-passage doctrine, was designed for a permissive strait; it now confronts a counter-instrument with the force of Iranian domestic law and no written US answer to the toll-payment bind.

Deep Analysis

In plain English

On 5 May, Iran created a new government body called the Persian Gulf Strait Authority. Any ship that wants to sail through the strait of Hormuz must now contact this authority, fill in paperwork, and pay a fee. If a ship enters the strait without permission, Iran says its military will intervene. The problem is that international law, specifically a treaty signed by 170 countries, says ships have the right to sail through international straits without asking anyone's permission. Iran never signed that treaty. The US government acknowledged the new authority in a written maritime warning, which is the first time Washington has formally recognised in writing that Iran has created an institution to control the strait.

Deep Analysis

Root Causes

UNCLOS lacks an enforcement mechanism for transit-passage violations. The International Tribunal for the Law of the Sea can adjudicate disputes, but Iran's non-ratification of UNCLOS means it has no compulsory jurisdiction over Tehran. Iran can violate Article 38's transit-passage guarantee without triggering any automatic legal consequence.

OFAC General License W creates a second structural trap for non-US-flagged vessels: complying with the PGSA by paying the toll violates US sanctions, because PGSA toll payments flow through Bonyad Mostazafan, a designated entity. Refusing to pay the toll exposes the vessel to IRGC interdiction. No lawful path exists for a non-US vessel to satisfy both frameworks simultaneously.

What could happen next?

Precedent
The PGSA's codification of a toll-and-permit regime for an international strait sets a precedent other states (China over Taiwan Strait, Russia over Northern Sea Route) could cite to advance their own sovereign-access claims.
Consequence
Any ceasefire agreement must now explicitly dissolve a named Iranian regulatory body; dissolving the PGSA requires Iranian parliamentary action, raising the domestic political cost of any deal.

Source Landscape

This story draws on neutral-leaning sources from United States

United States

Primary parallel: The 1973 closure of the Bab el-Mandeb strait by Egypt and Yemen during the Yom Kippur War created a precedent for strait closure as a wartime instrument.

However, in 1973 no party created a named regulatory body with a formal email address, a defined corridor, and a statutory toll schedule; the closure was a military order, not an administrative institution.

Counter-parallel: The 1982 UNCLOS Caracas conference negotiations (1974-1982) saw Iran argue for enhanced coastal-state rights in the transit-passage provisions precisely because of Hormuz's strategic importance. Iran signed UNCLOS in 1982 but never ratified it, preserving its freedom to argue that the transit-passage regime is not binding on it while invoking UNCLOS norms when they serve Iranian interests.

The P&I insurance market has no established procedure for covering vessels that pay the PGSA toll: the toll payment itself constitutes an OFAC-prohibited transaction, which voids most standard marine insurance policies under their sanctions compliance clauses. Vessels that pay and then suffer a casualty cannot claim against their P&I club.

The structural consequence is that the PGSA effectively creates a market in which vessels must choose between IRGC interdiction risk (no toll) and insurance voidance (toll paid). Vessels with Chinese or Russian P&I cover outside the London and Scandinavian markets may be able to pay the toll without triggering sanctions consequences, creating a two-tier maritime system: Chinese-insured vessels transit with Iranian approval, Western-insured vessels require US naval escort.

Consensus view: The LSE Centre for the Study of Maritime Power's Alessio Patalano identifies the PGSA as the first formal institutional challenge to UNCLOS Article 38's transit-passage guarantee since the convention entered force in 1994: Article 38 explicitly prohibits prior authorisation requirements for transit passage through international straits, and the PGSA requires exactly that, placing Iran's domestic law in direct conflict with the 170-state international treaty architecture.

Counter-view: Tehran University's Faculty of Law and Political Science argues that Iran's position is legally coherent under UNCLOS Article 34, which preserves coastal-state sovereignty over the airspace and water column of straits, provided transit passage rights are not suspended; Iran reads this as permitting a toll and registration regime that falls short of outright closure.

Key tension: Whether the MARAD advisory 2026-004, the first written US government acknowledgement of the PGSA's existence, constitutes implicit recognition of Iran's institutional framework or merely a navigational warning that leaves the legal challenge unresolved.

First Reported In

Update #89 · Truxtun gets through; Trump pulls back

Maritime Executive· 6 May 2026

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Causes and effects

Caused by

Iran's Majlis ratifies 12-article Hormuz sovereignty law

The Majlis 12-article Hormuz sovereignty law ratified 2 May provided the legal spine for the Persian Gulf Strait Authority created 5 May

Occurred 2 May 2026

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Khamenei claims 'new management' of Hormuz

Mojtaba Khamenei's written 'new management of Hormuz' claim underpins the institutional framework the Persian Gulf Strait Authority implements

Occurred 30 Apr 2026

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This Event

Iran names a Hormuz toll authority

The first written US recognition of an Iranian institution that Washington's UNCLOS-based posture cannot reconcile with leaves third-flag tankers with no lawful path to comply with both regimes at once.

Led to

Iran's strait authority opens to silence

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 6 May 2026

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Northwood mission still on the dock

Iran's creation of the PGSA and its registration opening on 6 May produced a domestic-law permitting framework that the Northwood mission's UNCLOS-doctrine framework cannot answer, explaining the continued non-deployment posture.

Occurred 7 May 2026

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Different Perspectives

Wang Yi

China's foreign minister and Djibouti's issued a joint communique on 21 October saying the war should not reach the Horn of Africa and stressing free navigation through Bab al-Mandeb. The text names neither Iran nor the Houthis, and Djibouti hosts China's only overseas military base, opposite the Yemeni coast.

Ministry of External Affairs

India's foreign ministry called the attacks on Saudi civilian and energy sites "unacceptable" on 22 October and said they must stop at once. An Indian died at Dammam, Indians were injured there and at Shaybah, and about 4,000 Umrah pilgrims remain stranded by one MP's count.

Iraq

Iraq closed the al-Sheeb crossing with Iran to travellers and trucks from 21 October and said other crossings would close gradually. Unlike September's closure, which ended on a staged timetable, this one has none, and Iran's interior ministry said it received no notice.

Abdel Fattah el-Sisi

Egypt's president said on 21 October that Cairo's support would "defend Saudi territory, and does not include an attack on Yemen". Araghchi warned that Egyptian involvement would further complicate the situation, and Cairo's limit matches the one Ankara set on 8 October against attacking another state's soil.

UK Ministry of Defence

The MoD said on 20 October that RAF Typhoons over Saudi Arabia will not strike the Houthis, but extended tanker support to Saudi operations including against Houthi targets in Yemen. The tanker line sets no limit on strikes, so British aircraft may now refuel Saudi jets on bombing runs.

Turkey

Ankara sent the Mecca Joint Defence Agreement to parliament around 20 October, and its published text treats an attack on one party as an attack on all. Article 16 brings it into force only on the last ratification, so the 5 October invocation in Riyadh could not yet bind Turkey.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.