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July 14, 2026 — 11:58am
Four-and-a-half months in and still unresolved, the war in the Middle East has revealed an apparent absence of strategic thought by the Trump administration. President Donald Trump’s plan to impose a US toll on ships transiting the Strait of Hormuz reinforces that conviction.
The ceasefire, bought with promises to release billions of dollars of frozen Iranian funds and hundreds of billions of reconstruction aid, foundered last week over what has emerged as an intractable issue – control of the strait.
Somehow, the US planners overlooked or underestimated the leverage Iran could gain through closing the strait by threatening ships passing through it with drones and missiles.
They thought a demonstration of America’s military might, and the decapitation of Iran’s former leadership at the outset of the war, would force Iran’s surrender and possibly lead to regime change.
Instead, the war gave Iran an understanding of how powerful its ability to threaten traffic via the strait could be, and of the protection that control of the strait could provide against future attacks by the US and Israel.
It agreed to allow safe passage through the strait during the ceasefire, but didn’t agree – and the memorandum of understanding the US signed didn’t insist – that it would relinquish that control if and when a permanent end to the hostilities was agreed.
Control of the strait, rather than the fate of Iran’s nuclear stockpile, has developed into the central issue in the conflict.
Iran insists that it will retain it, while Trump now claims it for the US – even though both nations, as the UN pointed out this week, would be in breach of international law if they imposed the tolls that both envisage as the price of safe passage or, as Trump sees it, as recoupment of the costs of providing that protection.
During the conflict, Iran has charged as much as $US2 million ($2.9 million) to the larger tankers traversing the strait, although it has taken to calling the charges for ensuring safe passage through the strait service fees, rather than tolls.
Trump posted on his Truth Social on Monday that “the Hormuz Strait is OPEN and will remain OPEN” despite the Iranians firing on two ships within the strait on Monday and with traffic through the strait dwindling to negligible levels after hostilities flared again last week, as Trump declared the ceasefire “over.”
Trump has reinstated the US blockade of entry to the strait, denying Iranian revenue from oil sales, while saying that all other countries would have “fair and open” use of it.
He wrote: “The U.S.A will be, from this point forward, known as “THE GUARDIANS OF THE HORMUZ STRAIT,” but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World. The process and formation will begin immediately. Thank you for your attention to this matter! President DONALD J.TRUMP.”
Trump doesn’t appear to understand the implications of what he is saying is now US policy.
If he were able to impose the protection racket he has outlined (which would inevitably involve doing what the US has so far been unable to do and wiping out Iran’s ability to threaten shipping), it would have a significantly negative impact on oil prices and the global economy (and consequently US gasoline, diesel and fertiliser prices and the US inflation rate).
In fact, his planned tolls would probably effectively close the strait.
Oil tankers transiting the strait vary in size from vessels that carry about 500,000 barrels of oil to the very large crude carriers (VLCCs) with cargoes of up to 2 million barrels – and the handful of ultra-large tankers (ULCCs) that might hold 3-4 million barrels.
The $US2 million per vessel fee that Iran charges would, for the VLCCs, equate to a toll of about 1.2 per cent on the value of the oil it carries at today’s prices. (The oil price spiked 9.6 per cent to $US83.30 a barrel on Monday as the conflict resumed). For a ULCC, it would be a charge of between 0.6 per cent and 0.8 per cent of the value of the oil it is carrying.
The owners of those cargoes and shipowners might not be overjoyed to pay those fees, but compared to the cost of insurance, which has soared to around 5 per cent of the total value of the vessel and its cargo since the war began, it is relatively cheap protection against Iranian strikes.
Trump’s proposed 20 per cent toll is of a different order of magnitude. For a VLCC, it would cost $US33 million per cargo at today’s oil price. For a ULCC: between $US50 million and $US66 million.
Unless that cost can be passed on to customers – at its pre-war peak the strait carried about 20 per cent of the world’s oil and oil products – it would render the strait unviable as a route to market. If it could be passed on, global oil prices would rise to reflect the increased costs.
More likely, a US-controlled strait would accelerate existing efforts by the Middle Eastern oil producers to build new infrastructure that bypasses the strait. Already, there are plans to expand existing pipelines and build new ones and even the prospects of new ports in the Gulf of Oman.
Trump might – at enormous cost, given the military assets it would have to dedicate, permanently – be able to gain control of a waterway that few, if any, vessels with valuable cargoes would contemplate using.
A 20 per cent toll is an absurd idea, something that Trump presumably came up with by himself (he’s mused about the idea previously) and posted without input from the senior members of the administration.
The US Secretary of State, Marco Rubio, and other members of the cabinet have previously ruled out US tolls on the basis of international law, and because it would set a precedent for other international waterways where free passage has always been taken for granted – as it was via the Strait of Hormuz, until Trump and Benjamin Netanyahu decided to attack Iran.
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