Concerns are spreading in the shipping industry after Iran noted it could start charging an "insurance fee" for vessels transiting the Strait of Hormuz based on a memorandum of understanding (MOU) it reached with the United States to end the war.
The Financial Times (FT) reported on the 19th that a document circulating among shipping industry executives under the name of the Persian Gulf Strait Authority (PGSA) states that all vessels must hold a valid insurance policy approved by the PGSA. The PGSA is a government agency Iran established to manage transit through the Strait of Hormuz.
According to the PGSA document reported by the FT, transit is "free" for now, but the PGSA reserves the right to introduce insurance fees in the future. In other words, while passage is free for the time being, charges under the label of an "insurance fee" could be collected later.
However, nothing has been finalized yet. The PGSA used the term "insurance fees," but it is unclear whether it intended the same meaning as the commonly used "insurance premiums."
An Iranian official told the FT, "The wording of the memorandum is clear," adding, "For 60 days from the date the memorandum takes effect, vessel transit will occur with no fees collected." The official added, "After that period ends, Iran and Oman will consult with regional countries to agree on how to permit transit," noting, "It is highly likely that fees related to service provision and safe passage will be included."
As of Feb. 28 before the Iran war began, the Strait of Hormuz was a key maritime route through which about one-fifth of the world's oil and liquefied natural gas (LNG) shipments passed in normal times, and there are concerns that if additional expenses such as higher insurance premiums arise in this corridor, the burden on the shipping industry could grow.