KEY POINTS:
• At least one tanker operator paid approximately $2 million to transit the Strait of Hormuz through an Iranian-managed corridor, according to Lloyd’s List Intelligence, citing sources with direct knowledge of the transits.
• Iran’s parliament is considering legislation to impose formal transit fees on vessels passing through the strait, Reuters reported, citing the Iranian Students’ News Agency.
• Gas prices at isolated stations in California have reached as high as $8.21 per gallon, according to ABC7 Eyewitness News, though the national average stands at $3.93, per AAA data.
• Approximately 89 ships crossed the strait between March 1 and 15, according to Lloyd’s List Intelligence data cited by the Associated Press — a sharp decline from the pre-war rate of 100 to 135 vessels per day.
As the U.S.-Israel military campaign against Iran enters its fourth week, a new dimension of the conflict has emerged in the narrow waters of the Strait of Hormuz: a pay-for-passage arrangement that maritime analysts say is unprecedented in the modern history of global shipping.
Lloyd’s List Intelligence, the authoritative maritime trade publication, reported on March 19 that at least one tanker operator paid a fee of approximately $2 million to Iran to transit the strait. The report, authored by editor-in-chief Richard Meade, cited several sources with direct knowledge of the transits. According to Lloyd’s List, at least nine vessels have used a corridor near Iran’s Larak Island, with the Islamic Revolutionary Guard Corps Navy conducting visual vetting and verification of ships seeking passage.
However, Lloyd’s List cautioned that only one vessel has been confirmed as having made a payment. The publication reported that it was unable to establish whether payments were made in the other eight cases. The identity of the paying operator remains unknown, and Lloyd’s List noted that it remains unclear how the transaction was completed given the extensive international sanctions regime against Iran.
The corridor itself runs through Iranian territorial waters via Larak Island, according to Lloyd’s List tracking data. The Associated Press reported on March 18 that the passage arrangements appear to involve diplomatic interventions in several cases. India’s LPG carriers Shivalik and Nanda Devi transited without payment following government-to-government talks, according to both Lloyd’s List and the AP, which also reported that a Pakistan-flagged vessel, the MT Karachi, cleared through similar diplomatic channels via the Pakistan National Shipping Corporation.
Dimitris Maniatis, CEO of the shipping security consultancy Marisks, told Lloyd’s List that efforts are underway involving governments and industry to establish procedures under which vessels not affiliated with Israel or the United States could receive confirmation of safe passage.
Tehran Eyes Formal Transit Tolls
Separately, Iran’s parliament is now considering legislation that would formalize transit fees for the strait. Reuters reported on March 19, citing the state-run Iranian Students’ News Agency, that lawmakers are debating a bill to levy charges on passing vessels.
Iran International identified lawmaker Somayeh Rafiei as the bill’s proponent on March 19. According to Iran International, Rafiei argued that countries should be required to pay tolls and taxes to Iran when the strait is used for ship traffic, energy transit, and food supply.
Mohammad Mokhber, an adviser to Iran’s Supreme Leader, told the Mehr news agency that Iran would define a new regime for the Strait of Hormuz after the war, according to both Reuters and Iran International. Mokhber said, according to Reuters, that by leveraging the strait’s strategic position, Iran could prevent Western ships from passing through the waterway.
The distinction between the confirmed one-time payment reported by Lloyd’s List and the proposed parliamentary surcharge is significant: the former appears to have been a negotiated, case-by-case arrangement, while the latter would represent a formal state policy — one that Gulf neighbors have already warned against. Iran International reported that Saudi Foreign Minister Prince Faisal bin Farhan cautioned that such pressure from Iran would be counterproductive, with Riyadh reserving the right to military action if needed.
Gas Prices Surge, With Outliers Hitting $8
The disruption to one of the world’s most critical oil chokepoints has sent fuel costs climbing across the United States, though the scale varies dramatically by location.
According to AAA’s Fuel Gauge Report on March 21, the national average price for regular gasoline stands at $3.93 per gallon, up from approximately $2.94 a month ago — a roughly 34 percent increase. California’s statewide average is significantly higher, ranging from $5.26 to $5.70, per AAA and GasBuddy data.
At the extreme end, a Chevron station in downtown Los Angeles posted a price of $8.21 per gallon for regular gas, ABC7 Eyewitness News reported on March 9. Carscoops, citing that ABC7 report, noted that a station just a few miles away was charging only slightly above $4.19. Bloomberg reported on March 20 that California’s Division of Petroleum Market Oversight warned stations charging as much as $8 per gallon that such prices were out of line with crude oil and gasoline futures prices.
CBS News reported on March 13, citing GasBuddy head of petroleum analysis Patrick De Haan, that the market price of oil remains the single biggest variable component in pump prices. Brent crude has risen sharply since the U.S.-Israel strikes began on February 28, with prices crossing $100 per barrel, according to multiple sources. WION reported that Brent reached $118 per barrel at one point, while Al Jazeera cited a peak of $126 per barrel — a range reflecting volatile intraday swings during the crisis.
A Strait Under Selective Closure
The Strait of Hormuz, through which approximately 20 percent of the world’s traded oil passes daily, according to the U.S. Energy Information Administration as cited by Al Jazeera, has not been fully shut. Rather, Iran appears to be enforcing selective access.
The Associated Press reported on March 18, citing Lloyd’s List Intelligence data, that roughly 89 ships crossed the strait between March 1 and 15, including 16 oil tankers. That compares with pre-conflict traffic of 100 to 135 vessels per day, according to the same data cited by AP. The AP also reported that approximately 20 vessels have been attacked in the area since the conflict began.
Kun Cao, a client director at the consulting firm Reddal, told the Associated Press that the strait should be understood as selectively closed against some traffic while still functioning for Iranian exports and a narrow set of tolerated non-Iranian movements.
Iran has continued exporting oil through the crisis. The AP reported on March 18, citing data from the commodity tracking firm Kpler, that Iran had exported more than 16 million barrels of oil since early March. Analyst Ana Subasic of Kpler described the export volumes as showing continued resilience, the AP reported.
The security consultancy Control Risks, in a client briefing cited by Lloyd’s List, assessed that Western-affiliated ship owners are very unlikely to send vessels into Iranian territorial waters voluntarily, but that others are more likely to tolerate the risk.
Washington’s Response
U.S. Treasury Secretary Scott Bessent acknowledged in a CNBC interview on March 16 that Iranian oil shipments have continued, telling the network that Iranian ships had been getting out and that the administration had allowed it to supply the rest of the world. WION reported that Bessent indicated the U.S. would permit approximately 140 million barrels of Iranian oil already at sea to move to market. Separately, AAA’s newsroom reported on March 19 that the White House announced a release of 172 million barrels from the Strategic Petroleum Reserve over four months.
Meanwhile, the financial costs of navigating the crisis continue to mount for the shipping industry. CNBC reported on March 3, citing LSEG data, that freight rates for very large crude carriers hit an all-time high of $423,736 per day. CNBC also reported that multiple major insurers — including the American Club, Gard, Skuld, NorthStandard, and the London P&I Club — have cancelled war risk coverage for the strait.
Ali Vaez of the International Crisis Group told Al Jazeera on March 1 that closure of the strait would disrupt roughly a fifth of globally traded oil overnight, warning that prices would spike violently on fear alone.
This is a developing story. Information may be incomplete and will be updated as more details become available.
