"If tolls harden into costs like value-added tax, even after the war ends, freight rates and oil prices will not return to the transfer level, and this could become the start of stagflation (rising prices amid an economic downturn)."
A senior official in Korea's shipping industry warned this on the 1st regarding Iran's move to impose tolls in the Strait of Hormuz. As the possibility emerges that so-called "tollgate expenses" could be added to a key shipping route that carries about 20% of the world's seaborne oil supply, concerns are growing about a cost shock that would stoke inflation. For a country to mandate tolls in a natural international strait is unprecedented in modern shipping history.
◇$2 million per vessel: an unprecedented "strait toll"
According to Iran's state broadcaster (IRIB) on the 31st of last month (local time), the Iranian parliament's National Security Committee passed a bill to levy a fee of $2 million (about 3 billion won) per vessel on ships transiting the Strait of Hormuz.
The bill formalizes a charging system that imposes tolls in Iranian rials on ships passing through the strait and includes a blanket ban on the passage of vessels linked to sanctioned countries such as the United States and Israel. Mohammadreza Rezaei Kochi, chair of the parliament's Civil Commission, said, "Since we guarantee security in Hormuz, it is natural for ships to pay tolls."
Imposing tolls in Hormuz runs counter to international law, but Iran is defining it as an exercise of sovereignty and signaling its intent to push ahead. The United Nations Convention on the Law of the Sea (UNCLOS) guarantees the right of transit passage for ships of all countries in natural straits and prohibits unilateral fee imposition by coastal states.
Iran is not a party to the convention, but the right of transit passage has been recognized as customary law by the international community. However, Kim In-hyeon, emeritus professor at the Korea University School of Law, said, "Since the logic of power operates at the base of international law, Iran could invoke the fact that it is not a party and forcibly collect tolls through a show of force."
In fact, ships paying money to transit the Strait of Hormuz are being identified. According to shipping industry outlet Lloyd's List, on the 30th of last month more than 20 vessels used a new bypass route set by Iran, and at least two of them were found to have paid tolls. One of the ships reportedly paid about $2 million.
As this war has shown Iran that control over the Strait of Hormuz is a powerful card to pressure the West, a calculus to use it as a revenue-generating tool is also apparent. Crude oil passing through the strait averages 20 million barrels per day, the equivalent of 10 very large crude carriers (VLCCs).
CNN's analysis found that if $2 million is collected per vessel, crude oil alone would generate $20 million (about 30 billion won) per day, and including liquefied natural gas (LNG), more than $800 million (about 1.2 trillion won) per month in revenue.
That is on par with the monthly revenue Egypt collects from the Suez Canal and could become a key alternative income source for Iran, whose funding channels are blocked by economic sanctions. However, some observers say it is unclear whether a tolling system will actually take hold, given the potential backlash from major crude buyers.
◇Queueing expenses for collection could be compounded by insurance premiums
The industry fears the toll could harden into a basic cost like a value-added tax. A $2 million transit fee per vessel amounts to 1% to 2% of the value of crude cargo carried by a VLCC, not a very large share. But it could act not as a one-off expenditure, but as a structural expense that pushes up freight rates and overall cargo prices.
An industry official said, "This is not a simple tollgate expense, but something that raises the basic expense of the shipping industry and could directly lead to entrenched high oil prices in daily life." According to the U.S. Energy Information Administration (EIA), the crude oil passing through the Strait of Hormuz (20 million barrels per day) is about four to six times the capacity of nearby bypass pipelines (3.5 million to 5.5 million barrels per day), leaving virtually no alternative route.
The toll collection process itself is also cited as a bottleneck factor for maritime logistics. This is because it adds steps to submit voyage information to the Iranian military authorities and undergo inspections. The longer ships wait at sea for transit approval, the more demurrage (delay compensation) increases and the overall available shipping capacity in the market decreases.
The industry believes this is likely to lead to a surge in insurance premiums. The global insurance sector assesses control by armed forces as a top risk factor and has recently raised war risk surcharges from less than 0.25% of a vessel's peacetime value to 1.5% to 3%.
For a tanker valued at $100 million, in addition to the $2 million toll, an extra $1.5 million to $3 million (about 2.3 billion to 4.5 billion won) in insurance premiums would be required. An industry official said, "If you add demurrage and higher freight rates, the ancillary logistics expense imposed per voyage could jump into the millions of dollars."
◇Cost pressure spreading across industries: "concern about entrenched inflation"
A surge in spiderweb-like ancillary logistics expenses directly translates into higher costs across Korea's industrial sector, which relies on Hormuz for 70% of its crude imports. The petrochemical industry has already taken a direct hit as naphtha import prices, the basic feedstock for plastics and fibers, have jumped 50% since the war.
The ethylene spread, a profitability indicator for petrochemical companies (the price gap between ethylene and naphtha), remains at $100 to $200 (about 150,000 to 300,000 won) per ton, below the break-even point of $250 to $300 (about 370,000 to 450,000 won), entrenching operating losses. If maritime logistics costs push up the naphtha import unit price once more, the losses will inevitably deepen.
Cost pressure is also unavoidable for the airline industry, which relies on jet fuel for one-third of its operating expenses, and the shipping industry, which bears heavy bunker fuel burdens. If tolls harden like fixed costs, the downside for oil prices will be blocked, further increasing cost burdens across manufacturing, where electricity and logistics have high expense shares.
The spread of cost increases across industries ultimately acts as pressure that pushes up overall consumer prices. According to International Monetary Fund (IMF) data, for every 10% rise in international oil prices, global inflation increases by 0.4 percentage points.
An industry official said, "If tolls are added as a fixed cost like VAT, there is a possibility that the real oil price will remain entrenched around $90 per Barrel for a long period," adding, "This toll could be the trigger for structural inflation that raises the basic costs across the industrial ecosystem, including petrochemicals, transportation, and general manufacturing, and ultimately pushes up food prices and consumer goods prices in a chain reaction."