U.S. oil heavyweights are stepping up lobbying of President Donald Trump to stop Iran from imposing a toll on ships passing through the Strait of Hormuz.
According to the Financial Times (FT) on the 16th, senior officials in the U.S. oil industry are telling President Trump that any future peace deal must not allow Iran to charge a toll on tankers transiting the Strait of Hormuz.
Iran is currently pushing to levy fees on vessels passing through the strait and has signaled it intends to formalize the practice even after the war ends. Earlier, Iran's semi-official ISNA reported that the Iranian parliament was reviewing a plan to tax countries transporting energy and food. However, according to the semi-official outlet Iran International, actual collection measures so far have not proceeded smoothly, causing ship toll revenue to fall short of expectations and sparking signs of internal strife among senior Iranian officials.
The Strait of Hormuz is a critical waterway through which about 20% of the world's crude oil and liquefied natural gas (LNG) shipments pass. Since the United States and Israel began a war with Iran, Iran has threatened to attack ships transiting the strait, effectively halting passage. Iran's threats have sent marine insurance rates soaring, and shippers are rerouting around the area, increasing transportation expense.
The U.S. oil industry strongly opposes the move because it could set a dangerous precedent. They warn that if control of the strait remains with Iran, it would entrench the theocratic system and damage the oil industry, and that other countries such as China could adopt similar maritime tolls.
The American Petroleum Institute (API), the largest U.S. oil lobbying group, said, "Imposing tolls at such global chokepoints would set a troubling precedent for international waterways and negatively affect the global energy market."
U.S. oil magnate Scott Sheffield said, "We cannot allow Islamic clerics to control the Strait of Hormuz through tolls," adding, "The Islamic Revolutionary Guard Corps must not seize the strait. It must be kept open, and a joint response involving Europe, Asia and Persian Gulf nations will be needed."
On the 8th, President Trump, referring to Iran's toll collection plan, said "a joint venture format could also be considered," but the next day reversed course, saying, "Iran would be better off not imposing tolls." The episode has prompted the oil industry to intensify lobbying to keep the White House on a hard line in future talks.
Middle Eastern oil producers are taking the same position. Sultan Al Jaber, head of the Abu Dhabi National Oil Company (ADNOC), said, "The Strait of Hormuz is by no means something Iran can close or restrict," adding, "Forcing this would damage the lifeline of the global economy and threaten every nation's energy, food and health security."
The White House plans to maintain a hard line. A White House Spokesperson said, "The Strait of Hormuz is international waters, and it is the president's firm position not to allow Iran to impose tolls."