The Math

A two-dollar toll on every barrel of oil passing through the Strait of Hormuz would add 2.67 percent to the price of crude. The current crisis — the one the toll is meant to replace — has added 57 to 67 percent. Importers are paying twenty times more from uncontrolled disruption than they would pay under a formal toll. The question of whether Iran can charge for Hormuz passage comes down to math. The math is not what most people expect.

Iran’s ten-point plan proposes “controlled passage with Iranian coordination” and war reparations collected through transit fees. Those phrases are political. The numbers behind them are not. To understand whether the Hormuz toll is viable, you have to understand what flows through the strait, what a toll would generate, what it would cost importers, and why both sides might prefer it to the alternative.

What Flows Through Hormuz

Approximately 20 million barrels of crude oil pass through the Strait of Hormuz every day. That is one-fifth of the world’s total petroleum consumption and roughly 27 percent of all oil moved by sea. On top of the crude, the strait handles about 10 billion cubic feet per day of liquefied natural gas — 20 percent of global LNG trade — plus refined products, petrochemicals, and non-energy cargo.

The total annual value of goods transiting the strait runs between $700 billion and $730 billion. Between 100 and 153 ships make the crossing each day, depending on how you count smaller vessels and regional traffic.

The destination breakdown matters for understanding who would actually pay a toll. China receives 37.7 percent of the oil flowing through Hormuz. India takes 14.7 percent. South Korea accounts for 12 percent. Japan receives 10.9 percent. The four largest Asian importers together absorb roughly three-quarters of Hormuz oil traffic. Europe takes a smaller but still significant share.

What Could Tolls Generate?

There is no single toll model that Iran has formally proposed. But there are four plausible approaches, each modeled on existing waterway fee structures around the world. The chart below shows annual revenue under each scenario.

The per-barrel model is the most straightforward. At $0.50 per barrel, the toll generates $3.65 billion per year. At $1, it doubles to $7.3 billion. At $2 — the upper end of what most analysts consider politically sustainable — revenue reaches $14.6 billion. At $5, which would likely trigger serious pushback from importing nations, the figure climbs to $36.5 billion.

The per-ship model works differently. At $50,000 per transit, applied to roughly 100 ships per day, annual revenue is $1.83 billion. At $100,000 per ship, it reaches $3.65 billion. At $200,000 — roughly comparable to a Suez Canal transit fee for a large tanker — the total hits $7.3 billion. At $500,000, which would make Hormuz the most expensive waterway on Earth, revenue reaches $18.25 billion.

The waterway comparison model benchmarks Hormuz against existing toll regimes. At Suez-like rates, the strait would generate approximately $14.1 billion per year. At Panama-like rates, $13.8 billion. At Turkish Straits rates, which are considerably lower, $10.6 billion. Each of these comparisons has limitations — the Suez Canal is a man-made channel, the Panama Canal involves locks, and the Turkish Straits operate under a specific international treaty — but they provide a baseline for what the global shipping industry considers normal.

The cargo-value model applies a percentage fee to the value of goods transiting the strait. At 0.5 percent of cargo value, the toll generates roughly $3.5 billion annually. At 1 percent, $7 billion. At 2 percent, $14 billion. This model is the most administratively complex but also the most equitable, since it scales with the value of what each ship carries.

The practical sweet spot — combining a per-barrel oil fee, a separate LNG surcharge, and a per-ship transit charge — lands in the range of $10.2 billion to $17.5 billion per year. That would represent 2.8 to 4.8 percent of Iran’s GDP, or 21 to 37 percent of its current oil revenue.

The Killer Comparison

The numbers above mean nothing without context. The critical question is not how much a toll would generate for Iran. It is how much it would cost the countries that import oil through Hormuz. And here the math becomes unexpectedly favorable for the toll.

A $2-per-barrel toll adds 2.67 percent to the price of oil, based on a pre-crisis price of $75 per barrel. That is not trivial, but it is modest by any measure. Compare that to the crisis premium that the current disruption has imposed on global markets: $40 to $50 per barrel above fundamentals, representing a 57 to 67 percent increase.

Even a $5-per-barrel toll — at the aggressive end of any realistic proposal — would add just 6.67 percent to the oil price. The crisis premium is adding ten times that. The arithmetic is stark: importers are currently paying twenty times more from uncontrolled disruption than they would pay under a formal toll regime.

This is the economic argument that makes the Hormuz toll viable. Importing nations would prefer predictable, modest fees to unpredictable, massive price spikes. The toll is not cheap. But it is cheaper than chaos. And unlike a crisis premium, which flows to speculators and to producers who happen to have supply outside the disrupted zone, a toll flows to a defined recipient under a defined structure. It can be budgeted for. It can be incorporated into long-term contracts. It replaces uncertainty with cost.

Iran’s Own Math

The toll is not just attractive for importers. It changes Iran’s own calculus in a fundamental way.

During a full blockade of the Strait of Hormuz, Iran loses access to its own export route. Iranian oil cannot flow out any more than Saudi or Kuwaiti oil can. The estimated cost to Iran of the current disruption is roughly $34 billion per year in lost oil export revenue. A blockade is not free for the country imposing it.

A toll at $1 to $2 per barrel generates $7.3 billion to $14.6 billion per year while keeping the strait open — which means Iran’s own oil continues to flow. The toll does not replace lost oil revenue. It supplements full oil revenue. Iran collects both the proceeds from selling its own crude and the transit fees from everyone else’s crude. The blockade, by contrast, eliminates Iran’s oil income entirely and generates nothing in return.

On pure financial terms, the blockade is strictly worse for Iran than a toll. The toll is additive. The blockade is destructive. This is why the ten-point plan includes “controlled passage” rather than “continued closure” — Iran wants the strait open, on its terms, collecting fees. Closure was leverage. The toll is the objective.

Who Pays?

The distribution of toll costs follows the distribution of oil imports through Hormuz. The largest importers pay the most. At a $2 per barrel rate, the breakdown looks like this:

China is the largest payer by a significant margin, reflecting its position as the world’s biggest importer of Persian Gulf crude. At $5.69 billion per year, a Hormuz toll represents a meaningful but manageable cost for Beijing — roughly equivalent to one aircraft carrier’s construction budget. India, South Korea, and Japan each pay between $1.68 billion and $2.19 billion. Europe, which has been aggressively diversifying away from Persian Gulf supply, pays the least of the major importers.

The political dimension is important. China and India are both countries that maintained trade with Iran throughout the sanctions era and that navigated the selective passage regime during the blockade. Neither is inclined to confront Iran over a toll that costs less than the disruption premium they have already been absorbing. South Korea and Japan, more aligned with Washington, face a harder choice — but even for them, the financial argument for tolling over disruption is overwhelming.

The Sanctions Problem

There is an obvious objection to the toll model: Iran operates outside the Western financial system. How do you pay a toll to a country under comprehensive sanctions, when the payment itself could trigger secondary sanctions against the payer?

The answer is that viable channels already exist, and several more are under active development.

China already pays for roughly 90 percent of its Iranian oil imports in yuan, routed through the Cross-Border Interbank Payment System, or CIPS, which Beijing built specifically to operate outside the SWIFT-dominated Western financial architecture. India has settled Iranian oil purchases in rupees through designated bank accounts. Neither mechanism is seamless, but both are functional and have handled billions of dollars in volume.

Newer systems are expanding the infrastructure. BRICS Pay, a multilateral payment platform backed by Brazil, Russia, India, China, and South Africa, is scheduled for launch in 2026. Project mBridge, a multi-central-bank digital currency initiative involving the Bank for International Settlements, has already processed more than $55 billion in test volume. Saudi Arabia declined to renew its fifty-year oil pricing agreement with the United States and has begun accepting yuan for crude sales.

The sanctions architecture that would theoretically prevent toll payments is the same architecture that Points 4 through 6 of Iran’s ten-point plan demand be dismantled. If a deal is reached and sanctions are lifted, the payment problem disappears entirely. If sanctions persist, Iran has demonstrated that alternative channels exist and function. Either way, the financial plumbing for a toll regime is available.

The Gulf Exporters’ Vulnerability

The toll discussion often focuses on importing nations — the countries buying oil through Hormuz. But the countries that export through the strait are even more vulnerable, because most of them have no alternative.

Kuwait routes 100 percent of its oil exports through the strait and has zero bypass infrastructure. If Hormuz is closed, Kuwait’s entire oil industry stops. Qatar is in an identical position for its LNG exports, which constitute the overwhelming majority of the country’s revenue. Iraq sends more than 90 percent of its southern crude exports through Hormuz.

Saudi Arabia and the UAE have invested in pipeline bypasses — the East-West Pipeline across Saudi Arabia with a capacity of 5 to 7 million barrels per day, and the Abu Dhabi Crude Oil Pipeline with 1.8 million barrels per day — but even their combined capacity of roughly 8 to 9 million barrels per day covers less than half of the 20 million barrels that normally flow through the strait.

During a full closure, Gulf exporters collectively lose an estimated $1.5 billion to $2 billion per day in revenue. That loss does not just affect government budgets. It affects the contracts, commitments, and sovereign wealth fund inflows that underpin the entire economic structure of the Gulf Cooperation Council. A toll, even a significant one, is categorically preferable to closure.

This is the leverage dynamic that makes the Hormuz toll self-enforcing. Gulf exporters cannot afford a closed strait. Importers cannot afford the crisis premium. Iran cannot afford to block its own exports. Everyone’s financial interests converge on the same outcome: an open strait with a fee attached. The only question is the size of the fee and who controls the mechanism.

What Toll Revenue Means for Oman

The discussion of Hormuz tolls typically focuses on Iran, but Oman is the other sovereign whose territorial waters span the strait. Under a 50/50 revenue split at Suez-like rates, Oman would receive approximately $7 billion per year — roughly 2.8 percent of GDP. A more realistic model based on joint service fees would generate $210 million to $1 billion. Either way, the revenue gives Oman a financial incentive to participate, and participation transforms the toll from a unilateral arrangement into bilateral governance. Part 8 of this series examines Oman’s position in depth.

The Bottom Line

The math on a Hormuz toll points in one direction. For Iran, the toll generates $7 billion to $15 billion per year in new revenue without sacrificing oil exports. For importers, it adds 2 to 3 percent to oil costs — a fraction of the crisis premium they are already paying. For Gulf exporters, it keeps the strait open, which is worth $1.5 billion to $2 billion per day in avoided losses. For Oman, it creates a new revenue stream tied to sovereignty rather than extraction.

The losers are narrow: the United States loses the principle of unimpeded navigation, a principle it has defended with naval power for decades. But principles do not generate revenue, and the financial pressure on all parties to accept a toll regime is intense and growing with every day the crisis continues.

None of this means a toll is inevitable. Political objections, alliance dynamics, and the nuclear question could all derail it. But the financial logic is there. And in the world of international negotiations, financial logic has a way of winning arguments that legal principles and military threats cannot.

In Part 6, we examine what Trump means when he calls a possible Hormuz arrangement a “joint venture” — and whether the Gulf security-for-equity model can actually work.