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Iran's 'Toll Booth' in Hormuz Strait Forces Oil Tanker Detour to Larak

Iran has implemented a mandatory shipping corridor north of Larak Island in the Strait of Hormuz, requiring vessels to obtain IRGC clearance and pay fees. This has caused a 90% decline in strait traffic since the crisis began on February 28. The Iranian parliament has passed a bill to formalize the toll system, which experts argue violates international maritime law. Vessels from China, India, and Greece have been prioritized, with payments sometimes made in yuan. Several countries are engaging in diplomatic talks to secure safe passage for their ships. The legality of Iran's actions is contested, with comparisons to man-made canals like Suez being deemed inappropriate.

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Iran's 'Toll Booth' in Hormuz Strait Forces Oil Tanker Detour to Larak

Iran has established a de facto toll system in the Strait of Hormuz, forcing nearly all oil tankers to detour through a corridor north of Larak Island, where they must obtain clearance from the IRGC and pay fees, reducing strait traffic by 90% since February 28.

Background: The Strait of Hormuz Crisis

  • The crisis began on February 28, leading to a significant drop in shipping through the strait.
  • Iran is monetizing its control over the key oil shipping artery.

How the Toll System Works

According to maritime intelligence firms, the process involves:

  • Vessel operators approach IRGC-linked intermediaries and submit documentation (IMO number, crew names, destination).
  • IRGC screens and issues clearance codes and routing instructions.
  • Upon entering Iranian waters, IRGC commanders request clearance via marine radio.
  • Approved vessels are escorted by Iranian boats through Larak Island waters.
  • Failed screenings result in vessels being turned away.
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Vessel Access and Prioritization

  • Most transits since March 13 have used the Larak detour.
  • Countries with friendlier relations or trade links are prioritized.
  • Iranian, Greek, and Chinese-linked vessels dominate the transits.
  • Examples:
    • Two ultra-large containerships from China's Cosco Shipping completed the route after initial refusal.
    • India secured safe transits for its tankers without payment, with escort by Indian warships.
    • Malaysia and Thailand also obtained assurances after diplomatic talks.

Legal and International Law Challenges

  • Experts state Iran has no legal authority to impose blanket transit tolls under UN law of the sea treaty.
  • Charges must be for specific services like pilotage, not general transit fees.
  • Comparisons to Suez and Panama canals are invalid as those are man-made and charge uniform fees for maintenance.
  • The parliamentary bill to formalize tolls faces potential diplomatic and legal challenges.

Recent Developments and Diplomacy

  • Iran's parliament passed a bill to institutionalize toll collection, requiring agreement from other strait-bordering states.
  • At least two vessels paid fees in Chinese yuan, brokered by Chinese intermediaries.
  • Conflicting messages from U.S. and Iran on negotiations to end the conflict.
  • China calls for ceasefire and stable Persian Gulf, confirming three ships transited with facilitation.
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