The U.S. Central Command, on Sunday evening, issued a statement announcing that CENTCOM forces will begin implementing a blockade of all maritime traffic entering and exiting Iranian ports on April 13 at 10 a.m. ET (Eastern Time), in accordance with the President’s proclamation.
This announcement also clarified the anxious doubts regarding whether the proposed U.S. blockade of the Strait of Hormuz would apply to all ships. The statement clearly mentioned that the blockade will be enforced against vessels of all nations entering and departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and the Gulf of Oman. CENTCOM forces will not impede the freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports.
This U.S. decision came after negotiations between the U.S. and Iran in Pakistan remained inconclusive, or “concluded without a deal.” The proposed tolling of Hormuz has, for now, become the most crucial factor agitating the Gulf nations and the major importers of nearly 25 percent of global oil supplies. The tolling of this critical trade chokepoint has thrown up numerous challenges with global ramifications.
The ongoing war—currently under a fragile ceasefire—in the Persian Gulf and across the wider Middle East has taught the world many lessons. These span not only the multidimensional nature of modern warfare but also the near-collapse of traditional diplomacy, the growing criticism of multilateral treaties and agreements, and the fragility of moral positioning when weighed against narrower national interests. At the same time, the raging conflicts across West Asia highlight the irreparable collateral damage inflicted—especially in terms of civilian lives, infrastructure, and the erosion of hard-earned economic gains built over decades. This war, like many before it, will eventually come to an end. However, it will leave behind devastated societies, shattered infrastructure, and weakened economies. Nations—both directly and indirectly involved—will once again begin the long and arduous process of rebuilding and reconstruction to recreate a sense of stability, until the next disruption, as it were.
The ongoing conflict between the United States–Israel axis and Iran has demonstrated that large-scale economic reconstruction will be unavoidable once hostilities cease. Several initiatives are already being contemplated and, in some cases, initiated by the affected countries. The negotiations, beyond the ceasefire, explore possibilities such as the lifting of sanctions, abandonment of nuclear ambitions, reconstruction aid, and possible compensation to affected nations. In a significant policy departure, Iran, on March 31, announced its decision to begin levying toll charges on all vessels transiting the Strait of Hormuz. This, in a way, involves taking control of what has traditionally been considered free waters and establishing a revenue stream—an unprecedented action for a natural strait with international waters—and could potentially violate international laws guaranteeing such free passage under specific agreements.
This development has brought into sharp focus the fragility of global trade. Geoeconomic factors overriding geopolitics in a post-war scenario may well lead to the weaponization of geography, exploitation of natural resources, and the prioritization of national interest over multilateral agreements and international law. In this case, Iran’s move to leverage a critical maritime passage for its own economic resilience—despite the adverse impact on global trade—is notable. Historically, such practices are not unprecedented and align with the principles of economic realism that have guided state behaviour for decades. Iran’s proposed levy—reportedly around $2 million per ship as a transit fee—signals its intent to convert the Strait of Hormuz into a revenue-generating chokepoint, possibly akin to other global maritime corridors such as the Suez and Panama Canals and even the Turkish Straits.
Following the inconclusive peace dialogues a few days ago, an uneasy calm prevails in the region. Military exchanges between Israel, the United States, and Iran—along with retaliatory actions affecting Gulf countries—have created a highly volatile environment. Global trade has rarely been affected this severely, coming directly into the line of crossfire rather than suffering as a secondary consequence. Traditional energy supply lines, disrupted for over a month now, are on the verge of a major crisis. Shortages of oil and gas supplies have begun to disrupt energy security architectures, while the search for new and affordable markets has yielded limited alternatives. The Persian/Arabian Gulf will remain a critical hub for global energy exports, and countries such as Kuwait, Saudi Arabia, the United Arab Emirates, Iraq, and Iran will continue to rely on transit through the Strait of Hormuz in the absence of viable alternative routes. This narrow 95-kilometre passage between Oman and Iran facilitates the movement of approximately 25 percent of the world’s oil and LNG supplies, despite congestion typical of such chokepoints. Any proposed toll or blockade of this strait has the potential to throw global maritime oil and gas movement into disarray, with disastrous consequences.
Unlike the disruptions seen during the Iran–Iraq War of 1984, the global impact of the present conflict is far-reaching, and devastated economies may take considerable time to rebuild—not only in terms of physical infrastructure but also in restoring vulnerable energy systems. The collateral damage has affected not only the principal combatants but also neighbouring Gulf nations and global supply chains. The disruption of energy flows has triggered unprecedented global economic consequences. Both developed and developing economies are experiencing rising costs, supply shortages, and inflationary pressures. Maritime cargo movement has also been significantly impacted, further compounding logistical challenges. Even after the war concludes, long-term effects will persist. Countries such as Iran, Israel, Lebanon, and several Gulf states will face the dual challenge of rebuilding infrastructure and restoring energy production capacity. Many oil and LNG facilities have suffered damage and may take years to return to pre-war output levels. Consequently, the world is likely to endure prolonged periods of high energy prices and constrained supply.
One of the most critical lessons emerging from this conflict is the vulnerability of global trade chokepoints. A limited number of maritime passages facilitate over 80 percent of global trade by volume, making them indispensable yet highly susceptible to disruption. Key chokepoints include the Panama Canal, Suez Canal, Turkish Straits, Bab al-Mandab Strait, Strait of Hormuz, Strait of Malacca, Strait of Gibraltar, Strait of Dover, the Danish Straits, and others. While the Panama and Suez Canals are man-made and under the sovereign control of Panama and Egypt, respectively—and levy transit fees—the remaining chokepoints are natural straits governed by complex international maritime laws. Past disruptions, whether due to geopolitical tensions, conflict, or environmental factors, have already exposed the fragility of global supply chains. Limited transit corridors often force ships to take longer alternative routes, significantly increasing logistics costs and, ultimately, consumer prices. It is increasingly evident that global economic stability, food security, and energy supplies remain perpetually at risk due to these vulnerabilities.
The slow pace of developing alternative maritime and overland trade routes has become a matter of urgent global concern. Traditionally, discussions around chokepoints have focused on the Panama and Suez Canals, the Strait of Malacca, and Bab al-Mandab. However, until recently, the Strait of Hormuz was not widely perceived as a vulnerable node, except briefly during the 1984 Iran–Iraq War. Recent developments have changed that perception. Today, at least eight major chokepoints are considered critical to global trade, collectively handling over 80 percent of trade by volume and around 70 percent by value. The Strait of Malacca, for instance, is a 900-kilometre-long channel between the Malay Peninsula and Sumatra, linking the Indian Ocean with the South China Sea and the Pacific Ocean. It accounts for roughly 25 percent of global seaborne trade and is among the busiest shipping lanes in the world. The Turkish Straits—comprising the Bosphorus and the Dardanelles—connect the Black Sea with the Mediterranean and serve as vital routes for energy and commodity flows from landlocked Central Asian countries. The Suez Canal, a 193-kilometre man-made waterway in Egypt, links the Red Sea to the Mediterranean and handles approximately 12 percent of global trade. Similarly, the Panama Canal, an 80-kilometre engineering marvel, connects the Atlantic and Pacific Oceans. The Bab al-Mandab Strait, located between Yemen and the Horn of Africa, has gained prominence in recent years due to regional conflicts. It serves as a crucial link between the Gulf of Aden and the Red Sea, handling about 9 percent of global trade and supporting traffic through the Suez Canal. Other important chokepoints include the Strait of Gibraltar, which connects the Atlantic Ocean with the Mediterranean, and the GIUK Gap—situated between Greenland, Iceland, and the United Kingdom—which holds strategic naval significance.
Against this backdrop, the Strait of Hormuz has emerged as perhaps the most critical chokepoint in the current conflict. It connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and facilitates the export of energy resources from major oil-producing nations. Under UNCLOS, ships are guaranteed the right of transit passage, which cannot be arbitrarily suspended. However, complexities arise due to overlapping territorial claims. At its narrowest point, the strait spans approximately 21–24 nautical miles, leaving no area classified as high seas beyond the territorial waters of Iran and Oman (12 nautical miles each).
While Iran has signed UNCLOS (United Nations Convention on the Law of the Sea), it has not formally ratified it, adding further ambiguity to the legal framework. Reports suggest that Iran’s Parliament Security Committee has approved a “Strait of Hormuz Management Plan,” which includes the imposition of transit tolls. The plan reportedly envisions a structured fee system—possibly denominated in local or foreign currencies—to be levied on vessels in exchange for ensuring maritime security. Some reports indicate that certain vessels may have already paid transit fees in alternative currencies such as the Chinese yuan.
However, key questions remain unresolved: Who will bear the cost—the shipping companies, exporting nations, or importing countries—if such a policy is formally implemented? Media reports also suggest that Iran’s proposal to share toll revenues with Oman has been rejected, as Oman adheres to international maritime agreements that prohibit such levies. It is also worth examining whether Iran’s proposed toll can be justified under any prevailing legal framework and whether such tolls exist elsewhere in the world outside man-made canals within national territories, such as the Panama and Suez Canals.
International maritime law, particularly Articles 17 and 38 of UNCLOS, guarantees the right of “innocent” and transit passage. While coastal states can restrict passage under specific security concerns, imposing routine tolls raises complex legal and diplomatic issues—especially when part of the strait lies within another country’s territorial waters, as in the case of Oman. These developments are still unfolding, and it remains uncertain whether a formal tolling mechanism will be fully implemented or sustained. Nevertheless, the implications are profound. A transit fee of approximately $2 million per vessel—or about $1 per barrel of oil, as reported—would inevitably increase global energy prices, as these costs would be incorporated into freight charges. The tolls charged by the Panama and Suez Canal authorities are significantly lower than what is reportedly being proposed by Iran for Hormuz. Incidentally, Türkiye charges vessels transiting the natural waterways of the Turkish Straits—the Bosphorus and the Dardanelles—under a prescribed rate structure governed by the Montreux Convention. Moreover, if Iran successfully imposes a toll on Hormuz transit, it could set a precedent for other chokepoint-controlling regions—such as Bab al-Mandab, Gibraltar, Dover, and even the Strait of Malacca—to impose similar levies, further increasing the cost and complexity of global trade.
These developments also underscore the growing strategic importance of alternative routes. There is renewed urgency to accelerate the development of alternative trade corridors. Initiatives such as the International North-South Transport Corridor (INSTC), the India–Middle East–Europe Economic Corridor (IMEEC), the Kra Isthmus project in Thailand, and other Asia–Europe transcontinental and regional rail, road, and pipeline networks are gaining attention. Existing oil pipelines—such as those connecting the UAE to ports outside the Gulf and Saudi Arabia’s East–West pipeline—have already demonstrated their strategic value by bypassing vulnerable maritime routes.
Ultimately, the current crisis reinforces a timeless truth: sustainable global growth and shared prosperity are only possible in an environment of peace and stability. While geopolitical realities will continue to shape international relations, the need for cooperation, resilience, and forward-looking infrastructure development has never been more urgent. Finally, peace is—and shall remain—the only way to ensure that planet Earth continues to sustain growth and improve the lives of its inhabitants in prosperity. Peace remains the only enduring solution—and the hope for peace must endure.
(M. Jamshed is Distinguished Fellow at Chintan Research Foundation and Adviser, the World Bank. Views are personal)
(Cover Image: Strait of Hormuz islands. Photo Credit: commons.wikimedia.org)
CENTCOM forcesChinaDiplomacyDonald TrumpGeoeconomicsGlobal TradeGulf NationsINSTCIranIsraelNeighborhoodsPoliticsStrait of HormuzUNCLOSUS–Israel vs Iran WarUSAWest Asia