Trump’s ‘Guardian’ Fee: Costs for Supertankers Navigating the Strait of Hormuz
Adding to transit cost uncertainty, U.S. President Donald Trump has proposed a 20% toll on cargoes transported through the Strait of Hormuz. Traditionally, vessels have enjoyed free passage through this critical waterway under international maritime law, which prohibits coastal states from charging ships merely for exercising their right of transit. This proposal comes amid heightened tensions in the region and follows Iran’s previous imposition of ad hoc charges on some vessels during the recent U.S.-Iran conflict.
Trump’s 20% Toll: What It Means
Trump’s announcement allows ships safe passage through Hormuz for a 20% toll. According to a Bloomberg report, this levy could amount to approximately $30 million for a fully loaded supertanker carrying crude oil, based on current crude prices of about $80 per barrel. A typical supertanker can transport around 2 million barrels of oil. In contrast, Iran had previously charged up to $2 million per voyage for similar services.
On Monday, Trump stated that the U.S. would reinstate its blockade of Iranian ships using the Strait of Hormuz and declared the U.S. would act as the waterway’s “guardian.” He emphasized that the U.S. would be reimbursed at the rate of 20% on all cargo shipped. Iranian Foreign Minister Abbas Araghchi responded, acknowledging the need for compensation for safe passage but suggested that 20% was excessive.
How Would It Work?
Shipping companies would need clarity on the proposed toll before deciding whether to utilize the service. John McCown, a senior fellow at the Center for Maritime Strategy, noted that Trump’s social media post lacks details on how the charge would be determined. He raised questions about whether the toll would be based on the blockade’s costs, the U.S. Navy’s escort costs, or the value of the cargo.
Regardless of the calculation method, McCown believes the proposed fee would likely be prohibitively high for most shippers. Industry benchmarks suggest that shippers typically pay carrier fees of about 2%-3% of the goods’ value. A charge ten times that amount could deter shipping companies from using the route. Insurers may also play a critical role; if they deem the security risks too high, they might refuse coverage for vessels transiting Hormuz.
Surprise & Skepticism in Shipping Industry
The proposal has generated surprise and skepticism within the shipping industry. Many participants reported receiving no prior notice of Trump’s plan to impose a charge on cargoes moving through the Strait of Hormuz. The lack of clarity complicates the assessment of how this plan might affect future transit decisions. One ship captain likened the proposed charge to highway robbery.
Control of the Strait of Hormuz remains a pivotal issue for both the U.S. and Iran, especially as tensions escalate. Approximately one-fifth of the world’s oil and gas supplies pass through this strategic waterway under normal circumstances.
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