Iran has initiated new measures to solidify its control over the Strait of Hormuz and to establish a revenue stream from the strategic waterway through the creation of new regulatory entities and mandatory procedures, according to experts and Iranian officials. These developments come as discussions continue between Iran, the United States, and neighboring Gulf countries on the future management and security of the strait, a critical shipping route that it shares with Oman.
On Sunday, Mousa Rezaei, head of Iran’s primary insurance regulator, announced the establishment of a new insurance company focused exclusively on the Strait of Hormuz. Additionally, the Persian Gulf Strait Authority—an organization created by Iran in May—has required vessels passing through the strait to register and sign up for a new mandatory Iranian insurance policy. This registration is currently being offered free of charge but is expected to become a paid service after 60 days, coinciding with the duration of a recently signed cease-fire agreement between Tehran and Washington.
Shipping experts interpret these moves as an effort by Iran to exert greater authority over the waterway and to prepare grounds for eventually charging fees to vessels that previously transited without needing Iranian consent. Richard Meade, editor in chief of the shipping news publication Lloyd’s List, described the situation as unprecedented and noted that the Persian Gulf Strait Authority’s insurance demand essentially constitutes a toll “by another name.”
The insurance offered would cover risks such as attacks and detention of seafarers, threats that arose following increased hostilities earlier this year. Experts contend that Iran’s previous attacks on commercial ships and retaliatory actions have effectively weaponized the strait, making passage more hazardous. Maritime historian Salvatore Mercogliano compared the insurance requirement to extortion, likening it to “protection money” demanded by organized crime.
The initiative has drawn scrutiny under international law, which generally prohibits tolls for passage through international straits but allows fees for ancillary services like tugging or waste disposal. Since March, Iran has suggested charging ships fees labeled as service payments, but the lack of clarity on the nature or provision of these services has raised legal and diplomatic concerns. Maritime lawyers and experts say that simply designating the charges as "services" does not legitimize them under established maritime law.
A representative for the International Maritime Organization (IMO) stated that the insurance requirement had not been submitted to the IMO or formally recognized and emphasized that the right of transit passage through the strait “cannot be suspended or hampered by coastal states.” However, the spokesperson acknowledged that cooperative mechanisms for managing the strait among coastal states might be possible.
Beyond legal questions, the new policy poses practical challenges for shipping companies. The U.S. Treasury Department sanctioned the Persian Gulf Strait Authority in late May, describing it as an Iranian attempt “to monetize its campaign of state-sponsored terror by extorting vessels.” U.S. authorities have warned that vessels complying with Iranian demands could face sanctions themselves, complicating decisions for shippers navigating the strait amid a complex sanctions environment that also involves the United Kingdom, the European Union, and the United Nations.
Negotiations following a recent memorandum of understanding between Iran and the United States aim to maintain free passage in the strait while deferring tougher issues for further talks. Vice President JD Vance noted that Iran, Oman, and other Gulf countries would work toward establishing a security framework for the straits in the future. However, in the current transitional period, shipping remains uncertain. According to Meade, the industry finds itself in a state of “purgatory,” caught between longstanding practices and an unclear regulatory future.