As Iran said it could charge "insurance fees" on ships transiting the Strait of Hormuz based on a memorandum of understanding (MOU) for ending the war it reached with the United States, concern is spreading in the shipping industry.
The Financial Times (FT) reported on the 19th that "a document circulating among shipping industry executives in the name of the Persian Gulf Strait Authority (PGSA) says all vessels must hold a valid insurance policy approved by the PGSA." The PGSA is a government agency Iran set up to manage transits through the Strait of Hormuz.
According to the PGSA document reported by the FT, passage will be "free" for the time being, but the PGSA retains the right to introduce insurance fees in the future. In other words, transit is free for now, but later a charge in the name of "insurance fees" could be collected.
However, nothing is definitive yet. The PGSA used the term "insurance fees," and it is unclear whether this was intended to mean the same as the commonly used "insurance premiums."
An Iranian official told the FT, "The wording of the memorandum is clear," adding, "From the day the memorandum takes effect, ship transits will take place without any charges for 60 days." The official added, "After that period ends, Iran and Oman will agree on how to allow transits in consultation with regional countries," noting, "It is highly likely that fees related to the provision of services and safe passage will be included."
Before the Iran war broke out on Feb. 28, the Strait of Hormuz was a key maritime route through which about one-fifth of the world's oil and liquefied natural gas (LNG) cargoes passed in normal times, and there are concerns that if additional costs such as higher insurance premiums arise on this route, the burden on the shipping industry could grow.