As diplomatic efforts continue in Switzerland to resolve the ongoing conflict involving Iran, a new dispute has emerged over control of maritime traffic through the Strait of Hormuz, a critical chokepoint for global oil shipments. Iran has introduced a requirement that all commercial vessels passing through the strait register with a newly established Persian Gulf Strait Authority and obtain insurance through this Iranian agency. However, the maritime industry and Western insurance underwriters have largely rejected this mandate, raising concerns over its legality, operational feasibility, and compliance with existing sanctions.
Iran’s directive comes amid a 60-day truce period and includes a prohibition on traditional shipping routes through international waters in the strait, pursuant to unilateral jurisdiction asserted by Tehran. The Iranian government offers “free” insurance during this initial phase but reserves the right to impose substantial premiums afterward. Western maritime insurers and international firms warn that accepting this insurance would violate U.S. Office of Foreign Assets Control sanctions and expose companies to an unfamiliar and untrusted Iranian legal system. Industry insiders emphasize that no legitimate global shipping company would willingly purchase coverage from an unfamiliar Iranian insurer subject to Iranian law.
The situation has prompted shipping companies to reroute traffic through a narrower channel under Omani control, safeguarded by the presence of U.S. military forces. Recent operations report about 55 vessels navigating this alternate route on a single weekend, a figure significantly below the pre-war daily average of more than 130 ships. The bottleneck largely results from the presence of Iranian naval mines in the wider international shipping lanes, which remain uncleared.
In response to the disruption, Lloyd’s of London, alongside American insurer Chubb, has launched a substantial insurance consortium providing coverage of up to $200 million each for hull damage, liability, and cargo. This arrangement supports roughly 80% of vessels transiting through the Omani passage, aiming to facilitate safer passage amidst heightened risks.
Officials and maritime experts highlight mine clearance as an urgent priority. A senior European Union diplomat stressed that without the removal of mines, shipping companies and insurers would continue to avoid the strait’s international waters, thus prolonging the economic impact. According to industry sources, unless negotiation efforts succeed in pressuring Iran to abandon its unilateral insurance requirements and eliminate underwater mines, maritime trade through the Strait of Hormuz is unlikely to return to pre-war levels.
Iran’s use of the strait’s control has been described by some Western officials as an economic lever against the United States and its allies, with critics labeling the tolling system a form of “economic weaponry.” Conversely, Tehran maintains that its measures are legitimate regulatory actions during a sensitive security period. The ongoing dispute underscores the strategic importance of the Strait of Hormuz and highlights the complex challenges facing international maritime commerce amid geopolitical tensions.