Iran's Hormuz toll threatens global shipping freedom as Trump weighs deal

The Strait of Hormuz has always been a corridor, not a tollbooth. For centuries, ships have passed through its waters freely—a principle so fundamental to global commerce that it was codified in the 1982 UN Convention on the Law of the Sea. But that assumption is now under pressure from an Iran that has survived military strikes and emerged more determined to reshape the terms of passage through its territorial waters.

Geography is destiny in the Persian Gulf. Iran's coastline stretches 167 kilometers along the northern edge of the Strait, giving it undeniable leverage over one of the world's most critical shipping lanes. When the American military campaign against Iran's leadership began, it succeeded in eliminating Supreme Leader Ayatollah Ali Khamenei, but the regime did not collapse. His son, Mojtaba Khamenei, assumed power. If anything, the sustained assault hardened Tehran's resolve rather than breaking it. Iran is now emboldened enough to make demands about how any peace settlement will look—and those demands include control over the Strait's future.

This collision between geography and international law is not abstract. The principle of freedom of navigation—the right of all vessels to pass through international straits without toll or interference—has been recognized since the 1600s and remains a cornerstone of the rules-based maritime order. The United States has been its most vocal champion, running a formal Freedom of Navigation program since the 1970s in which the Navy physically asserts passage rights while the State Department diplomatically challenges any nation that tries to restrict them. The South China Sea and Taiwan Strait have been particular flashpoints for these operations in recent years.

Now Iran and Oman have reportedly developed a proposal to reopen the Strait with a two-way traffic system: inbound vessels would use a northern Iranian route, outbound traffic a southern Omani route. The proposal promises no tolls—but includes language about an undefined "service fee." That ambiguity is the hinge on which everything turns. Even if this specific proposal moves forward, full restoration of shipping will require Iran to remove all mines it has laid in the Strait and agree to a genuine ceasefire. The United States will be essential to achieving both.

For Australia, this is not a distant geopolitical abstraction. The country's prosperity depends on freedom of navigation through the Malacca Strait, the Singapore Strait, and the Lombok and Sunda Straits within Indonesia—all critical arteries for Australian trade. In April, when Indonesia's Finance Minister suggested imposing tolls in the Strait of Malacca, Canberra took notice, even though the idea gained no traction in Jakarta. The precedent matters. Australia itself imposes compulsory pilotage requirements in the Torres Strait, but only after securing international endorsement from the International Maritime Organisation. Any toll system in Hormuz would lack that legitimacy.

The real risk lies in how the conflict ends. Donald Trump's approach to dealmaking is transactional—he may view Hormuz tolls as an acceptable price for ending the war, a normal cost of doing business. But that calculation misses the larger architecture. Once toll-free passage becomes negotiable in one strategic strait, the principle erodes everywhere. Other nations will see an opening. The global trading system that has depended on unfettered access to international waters for four centuries would be fundamentally altered, not by law or consensus, but by the willingness of one dealmaker to trade away a principle for peace. Australia and the rest of the maritime world cannot afford to see it that way.