Captains steering oil tankers and cargo ships through the Strait of Hormuz, the narrow waterway between Iran and Oman that carries roughly a fifth of the world’s petroleum supply, are being stopped and told to pay. The price for passage has reached as high as $2 million per voyage, and Iran is demanding the money in Chinese yuan, not U.S. dollars. Behind the shakedown is a newly created Iranian government body and the armed backing of the Islamic Revolutionary Guard Corps.
The U.S. Treasury responded in May 2026 with a formal sanctions alert warning that any payment to Iran or the IRGC through this toll system carries severe legal consequences, regardless of whether the money moves through bank wires, cryptocurrency, barter, or any other channel. For shipping companies, insurers, and the energy markets that depend on uninterrupted flow through the strait, the situation is escalating fast.
What the U.S. government has confirmed
The clearest official evidence comes from the Treasury Department’s Office of Foreign Assets Control. Its alert does not speculate about whether Iran is collecting tolls. It proceeds from the premise that such demands exist and warns that payments for safe passage carry sanctions risk. The document names both the Government of Iran and the IRGC as designated sanctions targets and states that liability applies no matter how a transaction is structured. That language closes what might have been a loophole: companies cannot dodge enforcement by routing payments through digital assets, swaps, or in-kind transfers.
The alert does not describe how Iran collects the tolls internally. It focuses on consequences for anyone who pays. U.S.-designated persons and entities are involved in the toll regime, and any transaction benefiting them can trigger civil penalties and criminal prosecution. Washington is treating the system not as a legitimate sovereign fee but as a sanctions-evasion risk.
That the Treasury issued a formal, public alert also signals something broader: U.S. intelligence agencies have gathered enough information to treat the toll regime as real, active, and worth warning the global shipping industry about.
How the toll system reportedly works
Operational details have come primarily from institutional reporting rather than Iranian government records. According to the Associated Press, Lloyd’s List Intelligence reported that Iran established a new government body called the Persian Gulf Strait Authority, or PGSA, to approve transit and collect tolls. Lloyd’s List Intelligence also obtained an application form for ships seeking passage, suggesting a bureaucratic apparatus has been built around the process.
The AP described the IRGC as operating a toll regime that includes vetting procedures, passcodes, and armed escorts for vessels that comply. At least two vessels paid transit fees under this system, and those payments were reportedly settled in Chinese yuan. The choice of currency is significant: it fits Iran’s broader push to conduct trade outside the U.S. dollar system, and it offers a layer of insulation from American financial enforcement, since yuan transactions do not necessarily clear through U.S.-regulated banks.
Earlier Bloomberg reporting indicated that Iran began seeking transit fees on an ad hoc basis, with demands reaching as much as $2 million per voyage. That figure represents the upper bound of documented demands; exact payment ledgers or bank records have not been made public. Together, these accounts describe a system in which Iran and the IRGC are leveraging physical control over the strait to extract substantial sums from commercial shipping.
The legal problem Iran is creating
Under the United Nations Convention on the Law of the Sea, ships have a right of transit passage through straits used for international navigation. The Strait of Hormuz falls squarely into that category. Iran signed UNCLOS in 1982 but has never ratified it, and Tehran has periodically disputed aspects of the transit-passage framework. Even so, the principle is widely regarded as customary international law, meaning it applies broadly regardless of ratification status.
Charging tolls for passage through an international strait has no precedent in modern maritime practice and no clear basis under UNCLOS. Iran sent communications to the International Maritime Organization about what it called precautionary measures for the strait, according to the AP, but the full content and legal framing of those communications have not been published. Whether Iran is attempting to assert a legal justification under maritime conventions or simply notifying the IMO of a fait accompli remains unclear. As of June 2026, no member state has publicly announced a formal challenge to Iran’s actions within IMO forums.
What is still unknown
Several important questions remain unanswered. No primary Iranian government decree or official charter establishing the PGSA has been released or independently verified outside of Lloyd’s List Intelligence reporting. The agency’s legal standing under Iranian domestic law, its chain of command, and its precise relationship to the IRGC are all opaque. Whether it operates as a civilian body or as a direct extension of IRGC naval forces affects how international law and sanctions apply, and that distinction has not been clarified.
The $2 million figure, while reported by Bloomberg, has not been corroborated by payment receipts, bank records, or on-the-record statements from vessel captains or shipowners. The scale and frequency of yuan-denominated payments have not been independently quantified, leaving open the possibility that the documented cases are still limited in number.
There is also tension between different accounts of the toll system’s nature. Bloomberg characterized the fees as ad hoc demands, suggesting an informal shakedown at sea. The AP’s later reporting described a more structured regime with application forms, passcodes, and escorts. These descriptions may reflect an evolving system that started as improvised extortion and hardened into a bureaucratic operation, or they may reflect different stages of reporting on the same events. Without access to Iranian internal communications or a larger sample of affected vessels, the true scope and consistency of the regime cannot be pinned down.
No vessel captain or shipping executive has spoken on the record about paying the toll. No marine insurer has published updated war-risk premium schedules explicitly tied to the toll regime. And no allied naval force, including the U.S. Fifth Fleet based in nearby Bahrain, has publicly detailed how it plans to respond to armed IRGC escorts operating alongside commercial traffic.
What this means for oil prices and shipping costs
About 20% of the world’s petroleum liquids pass through the Strait of Hormuz every day, according to the U.S. Energy Information Administration. Any disruption or added cost at this chokepoint ripples outward quickly. If tolls become routine, shipping companies will pass those costs to charterers, who will pass them to refiners, who will pass them to consumers. A $2 million toll on a single voyage of a very large crude carrier, which typically holds about two million barrels, translates to roughly a dollar per barrel before accounting for insurance surcharges, rerouting costs, or delays.
War-risk insurance premiums for the Persian Gulf have already been elevated due to broader regional tensions. If insurers begin pricing in the toll regime as a distinct risk factor, premiums could climb further, adding another layer of cost even for ships that refuse to pay Iran directly. The combination of sanctions exposure, physical risk, and rising insurance creates a situation in which every party in the supply chain faces difficult and expensive choices.
For now, the picture of Iran’s Strait of Hormuz tolls remains incomplete. Governments and shipping companies are making high-stakes decisions based on a U.S. sanctions alert, credible but secondhand industry intelligence, and the conspicuous silence of everyone directly involved. What is clear is that Iran has found a way to monetize its geography, and the rest of the world is still figuring out how to respond.
More from Morning Overview
*This article was researched with the help of AI, with human editors creating the final content.
