Eight Shipping Groups Warn Hormuz Tolls Will Wreck Global Economies

Eight major shipping groups have joined forces to warn that tolls on the Strait of Hormuz will wreck economies worldwide. The organizations sent a letter this week to United Nations Secretary-General Antonio Guterres and International Maritime Organization head Arsenio Dominguez. They oppose any fees Iran and Oman might agree to for using the narrow waterway.

The groups representing shipowners called the move a direct violation of international norms. The letter arrived at the UN on Monday but became public on Wednesday. It states that compulsory charges, or service fees acting as a toll in all but name, would break established practice.

Beyond just money problems for global trade, such rules could destroy the legal framework governing straits used for international navigation. Transit rights must not be compromised by political deals. A permanent de facto toll booth threatens to raise energy prices and fuel inflation across the globe.

The human cost will follow these economic hits. Livelihoods around the world face real danger. The groups insist that freedom of navigation remains the foundation of international maritime governance.

The eight signatories include the Asian Shipowners Association, the Baltic and International Maritime Council, the Cruise Lines International Association, the European Shipowners Association, the International Chamber of Shipping, the International Association of Dry Cargo Shipowners, the International Association of Independent Tanker Owners and the World Shipping Council.

Dominguez told Al Jazeera earlier that imposing fees violates international law. He called it a very detrimental precedent for global shipping. Countries do not have the right to introduce tolls or payments on these straits, he said back in April.

Deborah Elms, trade policy head at the Hinrich Foundation in Singapore, warned Asia would feel the blow hardest because it buys most of the Gulf's energy exports. She told Al Jazeera that costs from Hormuz disruption show up immediately in diesel fuel price hikes and shortages. Fertiliser prices will skyrocket too. Plastics face rising costs and supply gaps as well.

Much of the oil shipped through Hormuz can reroute via pipelines, but natural gas remains a problem for now.

This specific chokepoint does not pose a major problem for container shipping operations. However, should tolls be applied to other waterways, both containers and bulk carriers would face much deeper cuts to their profitability," one expert noted recently. Iran set up this de facto maritime toll booth in the strait just days after the United States and Israel launched their war against the country in late February. Tehran made its fee regime official by creating the Persian Gulf Strait Authority back in May.

The ability of Iranian forces to strike commercial vessels has given them effective control over the waterway. This grip provides powerful leverage in any negotiations regarding an end to the fighting. Dozens of attacks have already been carried out on ships since the conflict began, with most blamed on Iranian hands. The International Maritime Organization confirmed 64 incidents and 17 deaths in the region after hostilities started.

Shipping across the Gulf remains severely disrupted more than five months into this war. At least 6,000 seafarers are still stranded inside and around the strait as of late July, according to data from the IMO and UN Human Rights Chief Volker Turk. In the latest incident on Wednesday, a tanker crew reported hearing two explosions while transiting the area, the UK Maritime Trade Operations Centre said.

Drew Thompson, a senior fellow at the S Rajaratnam School of International Studies in Singapore, pointed out that international agencies have limited power to influence any deal involving Iran, Oman and the US despite their growing concerns. "Despite clear interests in maintaining freedom of navigation in international straits, neither the UN, international organisations or shipowners have adequate leverage or ability to affect Iran's calculus," Thompson told Al Jazeera. He added that President Trump possesses the means to continue using violence to coerce a stubborn and resilient Iran. Yet the president has thus far been ambivalent about international law and freedom of navigation. This leaves it uncertain if he would use his political capital or military force to prevent Iran from extracting tolls on shipping in the strait.