Global Trade Jitters: The Debate Over Maritime Choke Point Tolls
Energy market investors are increasingly concerned that Iran’s proposal to jointly administer the Strait of Hormuz with Oman could set a global precedent for taxing maritime choke points. While experts emphasize that the Strait of Malacca remains secure, the prospect of administrative fees in critical waterways has triggered fears of potential oil supply shocks, according to analysis from Rystad Energy.
Hormuz Proposal Sparks Market Unease
The conversation surrounding maritime tolls began after reports surfaced that Iran and Oman presented the U.S. with a proposal to jointly manage the Strait of Hormuz. This narrow corridor is responsible for roughly 20% of the world’s oil traffic. Last month, the U.S. and Iran signed a memorandum of understanding allowing for safe, free navigation for a 60-day period. According to the agreement, future maritime services in the region will be defined by Iran and Oman following consultations with other Persian Gulf states, citing “the sovereign rights of coastal states.”
Investors fear this model could be replicated in other vital corridors. Janiv Shah, vice president of commodity markets at Rystad Energy, noted on CNBC’s “Squawk Box Europe” that some market participants are becoming “a little bit jittery.” Shah explained that if a toll system is successfully enacted in the Strait of Hormuz, the market may brace for similar attempts in other high-volume waterways.
The Strait of Malacca handled 29% of total maritime oil flows in the first half of 2025, making it the primary choke point in Asia and Oceania, per U.S. Energy Information Administration data.
Strait of Malacca: Security and Governance
Despite investor anxiety, maritime experts maintain that the Strait of Malacca is unlikely to see similar tolling schemes. Hunter Marston, director of the Southeast Asia program at the Lowy Institute, stated in a June 23 note that while the strait is a clear choke point, it is not a flashpoint. Marston attributes this stability to the Malacca Straits Patrol (MSP), an institution jointly managed by Indonesia, Malaysia, Singapore, and Thailand.
“The arrangement benefits all parties as well as the global economy,” Marston wrote. “Without this institution, the Malacca Strait would be just as vulnerable to capricious closure as the Strait of Hormuz.”
International law also serves as a barrier to such fees. The legal framework governing straits used for international navigation generally guarantees free passage. Although Indonesia’s Finance Minister Purbaya Yudhi Sadewa briefly suggested the possibility of tolls in April, the government later walked back the idea. Following a meeting in Indonesia’s capital, President Prabowo Subianto and Singapore Prime Minister Lawrence Wong reaffirmed their commitment to the unimpeded passage of vessels through the waterway.
Rerouting Risks and Geopolitical Stakes
The Center for Strategic International Studies (CSIS) highlighted in a July 1 analysis that Iran’s maneuvers demonstrate how controlling a maritime choke point can “significantly augment” a nation’s power. CSIS analysts noted that the stakes are particularly high in the South China Sea, where the Strait of Malacca and the Taiwan Strait connect major global economic centers.
While rerouting options exist if these straits were to be interrupted, analysts warn that they come at a cost. The 900-kilometer Strait of Malacca remains the shortest sea route between East Asia and the Middle East, primarily carrying crude oil and petroleum products.
When evaluating energy market risks, distinguish between “choke points”—geographical bottlenecks—and “flashpoints”—regions where institutional cooperation has collapsed. Institutions like the MSP serve as a primary indicator of waterway stability.
Frequently Asked Questions
Is it legal for countries to charge tolls in international straits?
No. Under international law, free passage is guaranteed through straits used for international navigation, making the imposition of tolls generally illegal.
Why is the Strait of Malacca considered more secure than the Strait of Hormuz?
According to the Lowy Institute, the Malacca Straits Patrol (MSP) provides a formal, multilateral framework for managing the waterway, whereas the Strait of Hormuz lacks a comparable, stable institutional structure.
What happens if a major maritime strait is blocked?
Rerouting options exist, but analysts at CSIS note that they come at a cost, which could lead to volatility in global oil prices.
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