Iran and Oman propose fee plan for Strait of Hormuz
Iran and Oman have presented the U.S. with a proposal to administer the Strait of Hormuz that includes the joint collection of administrative fees by the two Middle East nations.
Objective Facts
Iran and Oman have presented the U.S. with a proposal to administer the Strait of Hormuz that includes the joint collection of administrative fees by the two Middle East nations, according to NBC News reporting on July 2-3, 2026. In a memorandum of understanding signed last month, the U.S. and Iran agreed ships could safely and freely transit the strait for 60 days and that afterward administering the critical waterway would be left to be defined by Iran and Oman in discussions with other Persian Gulf states. While some regional diplomats told the Times the fees would be voluntary, Iranian officials have maintained that any payments would be compulsory. Omani Foreign Minister Sayyid Badr bin Hamad Al Busaidi said Oman does not support imposing fees on ships to transit the Strait, but drew a distinction between mandatory fees and voluntary charges to shipping companies to maintain the vital waterway. White House spokesperson Anna Kelly stated that President Trump has been clear that Iran cannot toll the Strait, which is an international waterway. Regional media outlets emphasize Oman's difficult mediation position between Iran's demands and U.S. opposition, with Press TV (Iranian state media) framing the proposal as legitimate maritime services, while Western outlets stress Trump administration threats and international law concerns.
Left-Leaning Perspective
European governments and some international legal experts have indicated openness to Oman's fee proposal as a practical compromise. European governments have taken a more pragmatic approach, with their focus shifted towards ensuring that any eventual arrangement complies with international maritime law; many European diplomats believe acknowledging some degree of Iranian influence may be necessary if negotiations are to succeed and commercial shipping is to continue without further disruption. Arsenio Domínguez, secretary general of the International Maritime Organisation, has acknowledged that while mandatory tolls would violate freedom of navigation, a voluntary funding arrangement based on the Malacca model could provide a workable solution. Left-leaning international law scholars present arguments that Iran has legitimate claims. Some international law scholars have concluded that Iran can conceivably regulate passage through the Strait of Hormuz, including charging fees, and Iran can make a reasonable case that it is within its rights to do so under international law. These voices emphasize that the Strait does not constitute "international waters" or the high seas; it is classified, instead, as an "international strait" exclusively composed of the territorial waters of two countries: Oman and Iran. Left-leaning coverage emphasizes Oman's genuine strategic constraints and the economic realities of post-war shipping. The focus downplays Trump administration threats and instead stresses the practical necessity of some accommodation to Iran if shipping is to resume normally. European outlets tend to frame the issue as requiring legal sophistication rather than absolute positions.
Right-Leaning Perspective
The Trump administration has taken an uncompromising stance on the fee proposal as fundamentally incompatible with international law and American interests. Secretary of State Marco Rubio told reporters that no country is allowed to charge tolls or fees on an international waterway, stating "That's existing international law. That's the way it is in international waterways all over the world, and that's the way we expect it'll be here." The Trump administration has rejected the proposal outright; President Donald Trump has described any system of fees or tolls as unacceptable; Treasury Secretary Scott Bessent has threatened sanctions against Muscat if it assists in implementing the scheme. Right-leaning legal experts argue Iran's claims have no basis in established maritime law. James R. Holmes, chair of maritime strategy at the US Naval War College, told The New York Times that international law contains no provision allowing a coastal state to charge vessels for passage through a natural waterway, stating "There is no provision in international law for a coastal state charging for passage through a natural waterway, whether you call it a toll or a fee or whatever." Conservative commentary emphasizes that he contrasted Hormuz with waterways such as the Panama Canal and the Suez Canal, where operators maintain infrastructure and provide services in exchange for payments, implying Iran provides no comparable infrastructure. Right-leaning coverage frames Oman's proposal as capitulation disguised by semantic games—"service fees" versus "tolls"—and emphasizes that allowing such precedent would undermine global maritime freedom. The framing stresses Trump's explicit threats and Treasury Department sanctions as appropriate leverage.
Deep Dive
The war that began February 28, 2026, changed the strategic context fundamentally: before the war, the Strait of Hormuz was an international shipping route between Iran and Oman that vessels sailed through free, and during the fighting, Iran effectively blockaded the waterway, sending energy prices skyrocketing. A framework peace agreement signed by the United States and Iran this month, which stopped the war, addressed the Strait of Hormuz, ensuring "the safe passage of commercial vessels with no charge," but only for a period of 60 days while negotiations to define specifics carried on; the agreement stipulated that Iran and Oman should start a "dialogue" about what happens in the shipping route after that. The Oman-Iran proposal represents an attempt to institutionalize oversight before the 60-day grace period expires. Both perspectives correctly identify genuine tensions but frame them differently. The Trump administration's position rests on established UNCLOS principles and the strategic danger of allowing any coastal state to monetize chokepoints. Yet the left correctly notes that the Malacca navigation fund has collected only about $23 million over the past 15 years, while Iran believes a Hormuz charging system could generate as much as $40 billion annually, revealing that for Iran, this is fundamentally about power and revenue, not maritime maintenance. Oman's genuine contribution—spending on strait maintenance without prior fee collection—gives the left's argument some merit that service-based fees differ from tolls. However, the right's concern that semantics mask mandatory extraction is validated by Iran's deputy foreign minister Kazem Gharibabadi stating that Tehran's priority was to come to an agreement with Oman, but if Oman is unwilling to establish a joint framework for managing the waterway, Iran will move forward on its own, suggesting Iran views this as a stepping stone to unilateral control. What remains unresolved is whether the 60-day window produces genuine consensus or merely delays inevitable confrontation. The struggle over the future of Hormuz highlights the challenges Omani officials face, as the strait is "a matter of urgent national security for them," according to Anna Jacobs, a New York-based nonresident fellow at the Arab Gulf States Institute. Oman must satisfy incompatible demands: the U.S. insists on zero monetization; Iran insists on formal control and revenue; shipping companies require predictable, low-cost passage. The proposal's ambiguous language ("service fees" rather than "tolls") reflects this impossibility. Whether voluntary fees will remain voluntary if shipping companies refuse to pay, and whether Iran will accept anything less than de facto toll power, determines whether this compromise holds or collapses when the grace period expires.
Regional Perspective
Oman's Foreign Minister Badr al-Busaidi expressed support for a joint initiative with Iran to introduce "maritime service fees" in the Strait of Hormuz, arguing charges are necessary for safe navigation and outlining services that include enhancing navigational safety, protecting waters from pollution, and increasing preparedness for accidents; the remarks align with a joint statement issued by Tehran and Muscat that did not rule out charges despite Trump administration opposition. Al-Busaidi expressed support in an interview with Monte Carlo Doualiya, reaffirming Muscat's commitment to UNCLOS while clarifying that Oman opposes tolls on transit passage itself but distinguishes between transit tolls and legitimate maritime, environmental, and navigational service fees, which can be discussed voluntarily. Iranian state outlets (Press TV and Islam Times) frame the proposal as legitimate sovereign cooperation, emphasizing that under the 14-point deal, Iran is required to ensure toll-free passage for at least 60 days, with the MoU's fifth clause explicitly recognizing Iran's sovereignty over this vital chokepoint. Regional coverage diverges significantly from Western framing on the core question of legitimacy. While Western media emphasizes the Trump administration's threats and international law concerns, Iran according to Reuters reporting is fixated on winning international recognition of its control over the Strait of Hormuz, including the ability to levy fees on ships entering or leaving the Gulf. Iranian state media presents the proposal as reasonable maritime administration, not revenue extraction. Oman's public statements attempt to bridge this gap by emphasizing voluntary participation and service provision rather than tolls. The Omani side, which has found it increasingly tough in its balancing act between the US and Iran, argues that if the Sultanate does not engage in establishing a structured, legal mechanism to manage navigation on the strait, then Iran would unilaterally enforce a mechanism against International maritime law—this argument is presented in regional coverage as a practical reality, not a capitulation. Local stakes differ crucially: for Iran, the proposal represents an opportunity to formalize and monetize post-war strategic leverage; for Oman, it represents an attempt to prevent Iran from unilateral action that would damage Oman's reputation and economy; for regional states reliant on Hormuz (Qatar, Bahrain, Kuwait), it threatens additional costs on essential energy exports. Regional coverage emphasizes these concrete stakes more than Western coverage, which focuses on principle and law.