$2 Million Per Ship: How Iran's Hormuz Toll Plan Reshapes Global Trade And India's Energy Security
Iran's reassertion of toll on Hormuz, hours after the reported opening, brings up questions on the future of maritime trade and precedents it may set.
Published : April 17, 2026 at 10:23 PM IST
By Siddharth Rao
Hyderabad: On Friday, after more than a month and a half of blockade, Iranian Foreign Minister Seyed Araghchi announced that the Strait of Hormuz will be ‘completely open’ during the ceasefire period. However, hours later, the head of Iran’s parliamentary National Security Commission, Ebrahim Azizi, stated that they have instituted a 'new Maritime regime', announcing that only vessels with authorization from the IRGC Navy are permitted to navigate through designated routes in the Strait of Hormuz, 'after paying the required tolls'.
In a conflict increasingly characterised by economic pressure as much as military action, Iran has opened a new front, one that runs through the world’s most critical maritime chokepoint. The Strait of Hormuz, which is a narrow waterway carrying a significant share of the world’s energy supply, was blockaded by Iran when the conflict began.
Tehran reportedly imposed a transit fee on vessels passing through the Strait of Hormuz of around US$1 per barrel, which, for a Very Large Crude Carrier (VLCC), amounts to around $2 million per ship. While Iran opened it up temporarily, the fact that it can close it has implications that stretch across global markets, international law, and domestic economies, including implications for India.
The World’s Most Critical Energy Corridor
The Strait of Hormuz is widely regarded as the most important energy chokepoint in the global economy, as it handles about 20% of the world’s energy freight, including oil and Liquefied Natural Gas (LNG). This makes it indispensable for both producers in the Gulf and consumers across Asia and beyond.
As per reports, before the current conflict, the strait handled a high volume of traffic, averaging 130 ships per day. This uninterrupted flow of crude oil and gas was disrupted when the U.S. attacked Iran on February 28, leading Iran to impose a blockade. In contrast to previous daily figures, only about 120 ships in total have transited the strait since then, as of April 15. This dramatic contraction in traffic has caused a major shock, with fuel shortages and austerity measures being implemented in several countries.
This highlights a glaring fact: control over Hormuz is not just geographic, it is economic leverage.
Turning Geography Into Revenue: Unanswered Questions
The toll that Iran reportedly imposed on vessels signals a blend of strategic control over the key corridor and economic revenue generation, considering the scale of the activity.
Consider this: 130 ships per day roughly translates to 20 million barrels of oil. Even a marginal tariff per barrel results in a massive collective sum. Iranian economist Hossein Raghfar projected that Iran could generate up to $60 billion annually, turning its geography into a sustained source of national income.
Taking this into account, the blockade is not just a temporary wartime measure; it points toward a potential restructuring of how a "global common" can be controlled by a single nation.
This also raises questions about the rules that govern global trade routes. According to Article 38 of the United Nations Convention on the Law of the Sea, the Strait of Hormuz is a natural, international strait, and the article basically says that a transit toll can’t be imposed. This suggests that Iran’s reported toll appears to deviate from the international rules of the sea.
Historically, natural straits such as Hormuz, Malacca, Gibraltar, and Bab el-Mandeb have not imposed transit tolls, unlike man-made waterways like the Suez Canal, Panama Canal, and Kiel Canal, which charge fees for maintained infrastructure.
This distinction has been central to maintaining open and predictable global shipping lanes.
What Iran’s move suggests is a shift beyond disruption to active economic leverage.
By attaching a price to natural passage, the strait is no longer just a geographic constraint; it becomes a tool of economic influence.
The sharp decline in ship traffic since the start of the conflict reflects how quickly this leverage can translate into real-world effects.
Why Oil Prices May Not Tell the Full Story
Despite the scale of the toll, its immediate effect on global oil prices appears limited.
VLCCs dominate shipments from the Gulf, typically transporting around 2 million barrels of oil per voyage. At $1 per barrel, it’s a $2 million toll; in contrast, a similar ship transiting the Suez Canal pays $500,000 to $1 million per transit.
In global pricing terms, this translates into an estimated increase of just $0.05 to $0.40 per barrel, a relatively small adjustment when compared to the $35–$40 rise in oil prices per barrel already triggered by the conflict.
Moreover, much of this cost is expected to be absorbed by Gulf exporters, who may bear 80% to 95% of the toll burden, amounting to an annual cost between $6 billion and $14 billion.
Yet focusing solely on oil prices risks missing the broader economic picture.
India’s Deep Dependence On Hormuz
For India, the Strait of Hormuz is not just a transit route; it is practically a lifeline. According to government data, India imports about 60 per cent of its LPG consumption, and out of these imports, about 90 per cent come through the Strait of Hormuz, which has been impacted due to current happenings. India’s growing natural gas demand means it has to rely on countries like Qatar (which is one of India’s major LNG suppliers), making the Strait of Hormuz a key factor.
Apart from this, India also imports fertilizer inputs like ammonia and urea, petrochemicals, critical for India’s agriculture and industries; in addition to Gold from the UAE. All of these transit through the Strait of Hormuz.
This interconnected dependence means that any disruption or added cost at Hormuz has cascading effects across multiple sectors of the Indian economy.
How Does The Impact Transfer From Ships To Households
There have already been reports of shortages of LPG across the country, with a two-week waiting period for gas cylinders. In addition to just the shortages, the toll costs will eventually trickle down to the end-consumer, and the very passage itself through a critical region is also likely to increase freight and insurance costs, all with a cascading effect towards the consumer. This can mean higher fuel prices, increased cooking gas costs, and higher fertiliser prices, with an impact on agriculture and food inflation.
There have also been advisories from the government for citizens to use "alternate fuels such as Piped Natural Gas (PNG) and electric or induction cooktops." The government also stated in an inter-ministerial briefing on April 13 that the promotion of PNG and alternative fuels was one of the agendas of the meetings. There have also been raids against black marketing, with the government stating that over 59000 cylinders were seized in 1.28 lakh raids.
These indicate a direct impact of the blockade on Indian consumers, though the extent of the increase in costs remains uncertain, particularly if India is able to negotiate exemptions or alternative arrangements to avoid such toll payments.
A Precedent With Global Implications?
Beyond its immediate economic impact, if such tolls become the new norm, they pose a broader strategic question: can control over natural chokepoints be converted into sustained revenue models for enforcing states?
There is currently no global authority that regulates or imposes tolls on maritime routes, and international shipping norms rely heavily on compliance with frameworks such as UNCLOS.
If such a toll were to persist, it could set a precedent for other strategically located states to reconsider their own positions along critical trade routes.
Iran’s $2 million toll is not just a wartime measure or a revenue experiment. It is a signal of how geopolitical tensions can reshape the fundamentals of global trade.
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