Pakistan-brokered negotiations between the US and Iran took a significant step forward on Saturday, with President Donald Trump announcing that a deal to end the war - including reopening the Strait of Hormuz - had been "largely negotiated" and would be announced "shortly".
The breakthrough, if it holds, would bring to a close a conflict that has roiled global energy markets since 28 February, when the US and Israeli war on Iran triggered a retaliatory closure of the strait, through which roughly a fifth of the world's oil supplies pass.
A ceasefire in April briefly raised hopes of a settlement, but talks in Islamabad collapsed, prompting Washington to impose a naval blockade on Iranian ports - and pushing Tehran to dig in rather than back down.
Since then, Iran has moved to turn its de facto grip on the waterway into something more permanent. It established the Persian Gulf Strait Authority to govern shipping through the strait, demanding fees from vessels seeking to transit - a toll regime Washington and Gulf states have firmly rejected. "We don't want tolls. It's an international waterway," Trump said last week.
Despite progress in negotiations, it remains unclear how control of the Strait of Hormuz will be resolved.
Iran’s bid to tighten control over the Strait of Hormuz and levy transit fees has become both a negotiating tool in talks with Washington and a test of how far Tehran can turn a vital shipping lane into geopolitical leverage as it seeks to shape a new reality in the Middle East.
“I would frame Iran’s move in the Strait of Hormuz as an attempt to convert wartime leverage into peacetime authority,” Andreas Krieg, a senior lecturer at King’s College London, told The New Arab, adding that Tehran has long viewed the Strait not just as a geographic chokepoint but as one of its few levers to impose costs on the global economy, the US, Israel, and Gulf monarchies simultaneously.
“What appears to be changing now is that Iran is no longer only threatening disruption; it is trying to formalise a role for itself as the gatekeeper of passage through the Strait.”
Iran could potentially generate billions in annual revenue from the strait, much needed as the country grapples with a deep economic crisis. The war has also caused about $270 billion in damage, according to Iranian estimates.
But even if Strait of Hormuz tolls raise revenue , Iran is unlikely to lift itself out of economic crisis and war damage without sanctions relief.
At the negotiating table with the US, Tehran has demanded the release of frozen assets, sanctions relief, and reparations for war damage, among other requests.
Arman Mahmoudian, a research fellow at the University of South Florida’s Global and National Security Institute, told TNA that Iran is trying to justify the toll as necessary to maintain security and stability in the Strait of Hormuz, given the two wars it faced in June last year and in February.
“Would that be acceptable under international law? I doubt that. But at this point, it's ultimately a matter of enforcement and recognition,” he said.
Kazem Gharibabadi, Iran’s deputy foreign minister for legal and international affairs, wrote in a recent article that Tehran could tighten rules for passage through the Strait of Hormuz as security conditions change, arguing that past facilitation was goodwill rather than a legal waiver.
But some experts say Iran’s actions in the strait are illegal. “There’s no question that what they’re doing is illegal under international law,” Ian Ralby, maritime and international affairs expert and president of Auxilium Worldwide, told TNA , adding that Tehran is imposing a permitting scheme on vessels transiting an international strait and may extend control to submarine cable infrastructure, which would be an unprecedented move.
However, he added that Iran’s leverage over the global economy through the Strait of Hormuz is so significant that even legally questionable measures to restore commerce may seem preferable to continued disruption.
Ship traffic in the strait has fallen sharply since the war, from about 130 vessels a day before the crisis to just a dozen. More than 1,500 vessels and roughly 20,000 seafarers remain stranded in the Persian Gulf, according to the International Maritime Organisation (IMO).
Disruption in the Strait of Hormuz has driven up global oil prices. Shipping and war-risk insurance costs have also surged, adding inflationary pressure and supply-chain strain.
More than 20 ships have been attacked since the war began. Iran’s Islamic Revolutionary Guard Corps (IRGC) has reportedly indicated that the only safe passage through the strait is an Iranian-designated corridor, warning that vessels which deviate risk attack.
Tehran is reportedly charging tolls of up to $2 million on vessels passing through the Strait of Hormuz, payable in crypto or yuan. Meanwhile, countries like China, India, Pakistan and Russia have sought or secured special transit arrangements.
Krieg argues that the toll regime is less about revenue and more about giving Tehran leverage over a key shipping chokepoint by making transit depend on Iranian approval, which ultimately gives Iran lasting leverage beyond money.
“The value for Iran lies in being able to signal that any future confrontation over sanctions, Israel, the nuclear file or regional security could again affect shipping through Hormuz,” he said. “It is a standing coercive instrument, not just a revenue device.”
The new reality Iran is trying to establish in the Persian Gulf through tightening control of the Strait of Hormuz through a toll system may have significant regional implications.
Mahmoudian warned that, for the US, accepting Iran's toll system risks setting a dangerous precedent - “with Yemen's Houthis or Somalia potentially demanding fees in the Bab el-Mandeb, or Turkey in the Bosphorus”.
For the US, it would also implicitly recognise Iran's control over the strait, giving Tehran a permanent lever to deploy in any future disputes.
The US and Gulf states have rejected Iranian attempts to control the strait, warning ships not to comply with Iranian rules.
Gulf states cannot tolerate such a system, Krieg said, as they would see it as a sovereignty tax on their main economic artery. “Gulf exporters would be forced either directly or indirectly to accept that Iran has a right to monetise, supervise or condition their access to world markets,” he added.
Saudi Arabia, Egypt and the UAE are planning partial bypass routes around the Strait of Hormuz, mainly via pipelines and alternative export corridors, but the strait remains vital to Gulf states, whose energy and logistics flows would become more exposed to Iranian pressure.
Meanwhile, Oman and Iran are reportedly discussing a monitored, fee-based transit system for the strait - a plan Trump has so far rejected.
Ralby explained that although the Strait of Hormuz lies within Iranian and Omani territorial waters, international law guarantees transit for shipping without permits, fees, or obstruction, making any restriction or charges unlawful.
However, he explained that “if countries allow Oman and Iran to charge, there is no legal argument against it, because states make the laws and can change them, and what they're doing is essentially changing the law through state practice".
But in political terms, this would legitimise and institutionalise Iranian control over the strait.
Krieg said that “Iran appears to be using Oman to give the proposal a veneer of regional legitimacy and to complicate GCC opposition,” reframing the proposal as cooperation rather than coercion. Even if a formal toll system fails, Iran could still entrench softer forms of management over the waterway, gradually normalising its supervisory role over a critical global chokepoint.
However, this would place Oman in a difficult position and expose it to potential backlash from other GCC neighbours , which are unlikely to accept such a shift in the regional status quo.
While the broader negotiating framework between Washington and Tehran over the Strait of Hormuz is still unclear, Mahmoudian said it is likely to be central to any agreement.
He suggested the US would be reluctant to strike a deal without clarity on the waterway’s future role, noting that it is “critical” and that “one of the main pressures the US is facing at home is the impact it has made on the energy market”, especially with midterm elections looming in November. Dario Sabaghi is a freelance journalist interested in human rights Follow him on X: @DarioSabaghi Edited by Charlie Hoyle