As negotiators work to keep the Strait of Hormuz toll-free, new analysis from the Australian Strategic Policy Institute warns that letting Iran charge for passage would set a precedent reaching well beyond the Gulf, to waterways much closer to Australia.
In ‘Strait up tolls? What a Hormuz precedent means for the world’s waterways‘, ASPI Senior Fellow Elizabeth Buchanan and Senior Resident Fellow Adel Abdel Ghafar argue that the distinction between a service fee and a transit toll is one of the quiet foundations of maritime trade, and that Iran is working to erode it by dressing a charge for passage as payment for services that did not exist before the current US–Iran conflict.
The Explainer traces how a Hormuz precedent could have a global impact. It examines four chokepoints at different stages of the same risk: the Strait of Hormuz, where the erosion is already underway; the Malacca Strait, where Indonesia has floated a transit fee; the South China Sea, where Beijing has the institutional machinery to follow suit; and the Bering Strait, an emerging Arctic frontier where a US–Russia charge is conceivable.
“A toll charged for passage itself rather than a service is different and, in international straits, prohibited.”
The analysis sets out why this matters for Australia. Nearly 25% of GDP came from exports in 2024 and more than 99% of the country’s trade by volume moves by sea. Two-thirds of Australian exports and 40% of imports pass through the Malacca Strait alone.
A charge for passage at any of these chokepoints would raise consumer prices, squeeze export margins and lift the cost of imported fuel and goods, with Australia poorly placed to reroute the trade or to contest the waterways by force.
“Consenting to or complying with a Hormuz passage charge could end global freedom of navigation.”
The authors note that some charges are lawful. The Suez and Panama canals, the Torres Strait and Russia’s Northern Sea Route all levy fees to recover the cost of real services.
However, Iran’s case is different: it cites navigational, insurance and environmental services that were not in place before the war and has said the strait “will never return” to pre-war operations even as a temporary US memorandum of understanding has lapsed.
“It is clear from Tehran’s language and actions that it will indeed attempt to create administrative costs to falsely justify service fees.”
The authors argue that governments should reject Iran’s charge whatever their view of the war and that Australia has a particular stake in holding the line. As an island trading nation reliant on sea lanes for its security and prosperity, it has among the most to lose if a Hormuz toll becomes a template others copy.
“To prevent that first domino from falling, Australia should work with other maritime trading states to dissuade Iran from implementing its transit fee agenda. Canberra should also reassess the resilience of Australia’s economy should we enter a world where maritime passage alone has a price.”
