On July 10th, Iranian vessels attempted to block a British commercial tanker, British Heritage, from passing through the Strait of Hormuz. The Iranian ships retreated after receiving warnings from a British Navy ship accompanying the British Heritage. Iran’s Islamic Revolutionary Guard Corps (IRGC) is suspected of sending the vessels to intercept the British tanker, although the IRGC has denied any involvement.
The encounter occurred just days after British forces seized an Iranian oil tanker off the coast of Gibraltar, suspecting that it was headed toward Syria. Selling oil to Syria is a breach of European Union sanctions. Iran denied that the vessel was going to Syria, claimed the British seizure was illegal, and threatened retaliation.
Tensions in the Strait of Hormuz have escalated after the breakdown of a nuclear deal between Iran and Western powers. Iranian President Hassan Rouhani has threatened to shut down the waterway for global trade if the U.S. imposes more sanctions. The Strait of Hormuz is a narrow waterway linking the Persian Gulf to the Gulf of Oman and the greater Arabian Sea. About one-third of the world’s sea-traded oil is transported through the strait, making it “the world’s busiest shipping lane”.
If Rouhani closes the waterway, international oil trade would be largely disrupted, and oil prices would rise across the globe. Western nations would look elsewhere for oil supply, putting the Middle East’s oil industry at risk. In 2017, over 20 percent of U.S. crude oil imports came from the Persian Gulf. The complete shutdown of the Strait of Hormuz would come at a great cost to Iran, whose oil industry is already suffering from sanctions imposed by the U.S., which makes the shutdown unlikely to happen.
Iranian lawmakers are now discussing the possibility of collecting transit tolls for vessels crossing the waterway. The tolls would be collected from “unfriendly countries, meaning those who have no trade relations with us and have recognized US sanctions (against Iran),” said Iranian lawmaker Amirhossein Qazizadeh Hashemi. In exchange for the tolls, Iran would provide the vessels with safe passage through the strait. Hashemi said that the tolls would be compensation for Iran’s security expenses in the Strait of Hormuz.
The Iranian parliament intends on passing a bill that would allow the collection of tolls to begin. Although vessels enter Iranian-controlled waters at the strait’s narrowest point, the collection of tolls would be in violation of international law. The Third United Nations Conference on the Law of the Sea (UNCLOS) established that states bordering a strait may create laws and regulations regarding transit, but such laws and regulations “shall not discriminate in form or in fact among foreign ships or in their application have the practical effect of denying, hampering or impairing the right of transit passage.”
If Iran attempts to collect tolls from foreign vessels, it would likely face military intervention from Gulf countries like Saudi Arabia and the United Arab Emirates. Additionally, the U.S. could step in to ensure that the Strait of Hormuz remains free for passage. Closing the international waterway would be a risk for Iran, as it would certainly be condemned by the international community.