Oman Breaks With Iran, Opposes Hormuz Transit Fees: Oman has informed the United Nations that it opposes the introduction of transit fees for commercial vessels using the Strait of Hormuz. The news, announced on Thursday, July 9, marks a significant split with neighboring Iran over the future of the embattled waterway. It also comes only weeks after Tehran indicated it intended to move away from the pre-war, toll-free system and instead introduce a package of “service fees” for ships passing through the strait.
The announcement follows weeks of negotiations between Iranian and Omani officials who were discussing a potential new framework for managing navigation through the Strait, which sits between the two countries’ coastlines. While Tehran has consistently argued that ships should contribute toward the costs of providing navigational and security services, something Tehran has described as “service fees,” Muscat has now made it clear to the United Nations that it does not support charging vessels merely for exercising their right to passage.
Oil Platform. Image Credit: Creative Commons.
Generic Oil Tanker Image. Image Credit: Creative Commons.
The disagreement could potentially be explosive, with the U.S. and Iran currently exchanging missile attacks in the Gulf region following the collapse of June’s memorandum of understanding (MOU) ceasefire agreement. Although the MOU opened the strait after months of conflict, it left many questions unanswered about how shipping would be managed in the future – and it even gave Tehran the impression it maintained control over the routes through which ships would pass. In recent weeks, Iranian forces have repeatedly targeted commercial ships passing through the strait via Omani waters.
Oman Publicly Distances Itself
Oman on Thursday formally communicated its opposition to transit fees in the Strait of Hormuz to the United Nations, building on previous comments that indicated its plans to keep the strait open. The move follows weeks of disagreement with neighboring Iran over how commercial shipping should operate under a post-war framework intended to be established during the 60-day negotiating window set by the MOU.
While Muscat’s full communication to the United Nations has not been released, the country has confirmed that it opposes charging vessels solely for passing through the waterway, bringing Oman into alignment with Washington’s expectations for the future.
The announcement also builds on comments made by Omani Foreign Minister Sayyid Badr Albusaidi in late June, when he publicly rejected the idea of transit fees as Iran continued to insist they would be implemented.
Speaking to Monte Carlo International Radio, Albusaidi said that Oman “does not support imposing any fees” on passage through the Strait of Hormuz.
He did, however, say that some form of mechanism to help pay for improved navigational safety and emergency preparedness could be considered, as well as anti-pollution measures. Albusaidi suggested that the Omani government would consider adopting models similar to those used in the Straits of Malacca and Singapore.
The distinction between tolls and navigational fees is important. While Iran’s comments appeared to suggest that the regime was looking to implement fees that served as a de facto toll, Oman’s comments – combined with its continued call for de-escalation in the region – strike a far more pragmatic and diplomatic tone.
What Iran Called For
While Oman has now formally rejected transit fees, Iranian officials continue to insist that the post-war system governing the Strait of Hormuz should look fundamentally different than the one that existed before the conflict began.
Rather than restoring completely unrestricted passage, which allowed the Gulf region to safely and easily export crude oil and other petroleum products, Tehran says that shipping companies should contribute financially toward the costs of securing and managing the waterway.
Speaking during negotiations in Oman in late June, Iranian chief negotiator Mohammad Bagher Ghalibaf said that “everyone should know that the administration of the Strait of Hormuz will never go back to the way it was before the war.” He said that Tehran was working with regional partners on a new framework under which the states bordering the strait – Oman and Iran – would assume a greater role in its administration and receive compensation for providing security and environmental services.
The Wall Street Journal reported that Tehran believes its proposed maritime service fee system could have generated as much as $40 billion annually if it were implemented – a plan that seems increasingly unlikely after the collapse of the MOU and Oman’s formal announcement to the United Nations. The revenue, Iran said, would have been shared among participating coastal states as part of a new management framework.
A Growing Divide
Oman’s decision to formally oppose transit fees at the United Nations is the clearest sign yet that there is no consensus about how the strait will be managed. The situation was already fragile during the MOU, and it is arguably far more complex now that the U.S. and Iran are once again exchanging fire.
With Washington insisting that the Strait of Hormuz must remain free to navigate, Tehran threatening and striking commercial ships passing through routes it has not approved, and Oman offering a far more pragmatic approach to negotiations and management, the future governance of one of the world’s most strategically important waterways looks more uncertain than ever.
About the Author: Jack Buckby
Jack Buckby is a British researcher and analyst specializing in defense and national security, based in New York. His work focuses on military capability, procurement, and strategic competition, producing and editing analysis for policy and defense audiences. He brings extensive editorial experience, with a career output spanning over 1,000 articles at 19FortyFive and National Security Journal, and has previously authored books and papers on extremism and deradicalization.
