Chaos in the Strait of Hormuz
[5m 38s read]
Georgios Atsalakis, Economist
Associate Professor, Technical University of Crete
Any tolls imposed in the Strait of Hormuz would constitute a new threat to maritime nations and global trade. The idea of imposing a fee on ships and cargoes passing through the Strait of Hormuz is not merely another proposal for an additional financial burden. It touches the core of the global maritime order on which the internationalization of production, energy security and the economic rise of the major maritime nations have been based.
The recent proposal to impose a levy on cargoes passing through the wider area of the Strait, on the grounds that the fee would cover the cost of military protection and security, would have transformed an already highly dangerous maritime passage into a zone of direct financial burden. The proposal was eventually abandoned and replaced by efforts to reach trade and investment agreements with the Gulf states. Nevertheless, the fact that it was placed on the table, even temporarily, reveals how easily freedom of navigation can be transformed from an international principle into an object of political negotiation.
The Strait of Hormuz is not an ordinary maritime route. It is the world’s most important energy chokepoint. In 2024, approximately 20 million barrels of oil passed through it every day, an amount corresponding to around one-fifth of global petroleum consumption and more than one-quarter of global seaborne oil trade. At the same time, approximately 20% of international liquefied natural gas trade passed through the same corridor, mainly through Qatar’s exports.
Therefore, any fee imposed in the Strait would not affect only the ships present in the area at that particular moment. Its effects would be transmitted throughout the global economy through freight rates, insurance premiums, energy and commodity prices, industrial production and, ultimately, inflation, which in turn creates political instability.
Political instability is fertile ground for populist leaders. Unable to gain power under normal conditions, they wait for chaotic situations in order to deceive citizens and exploit public anger as a means of rising to power.
From a Transit Fee to a Cost Multiplier
The first and most immediate consequence would be an increase in transport costs.
A levy equal to 20% of the value of a cargo would not operate like an ordinary port fee. It would impose a very large additional burden on shipments of oil, natural gas, petrochemicals, fertilizers and industrial raw materials, the value of which may reach tens or even hundreds of millions of dollars per vessel.
Shipowners would be unable to absorb such a cost. They would try to pass it on to charterers and cargo owners. These parties, in turn, would transfer it to importers, industrial companies and ultimately consumers.
The result would be the creation of a cost multiplier. In addition to the transit levy, companies would face already elevated war-risk insurance premiums, delays, security expenses, possible crew changes, increased fuel consumption and additional legal and contractual costs.
These combined risks are difficult to price, insure and incorporate into long-term contracts.
UN Trade and Development, or UNCTAD, has already warned that disruptions at major maritime chokepoints result in route changes, longer transport times, higher freight rates and pressure on supply chains.
The recent experience of the Red Sea, the Suez Canal and the Panama Canal has demonstrated that, even without an official fee, uncertainty can drastically reduce traffic and increase the overall cost of global trade.
The Particular Exposure of Asian Economies
Asian economies would be on the front line of the consequences.
Approximately 89% of the crude oil and condensates passing through the Strait during the first half of 2025 were destined for Asian markets. China, India, Japan and South Korea together absorbed almost three-quarters of these flows.
For Japan and South Korea, which are heavily dependent on imported energy, a fee in the Strait would operate as an indirect tax on industrial production.
It would increase the cost of electricity, transport, chemicals, steel, automobiles and electronic products.
China, although it has greater capacity to diversify and possesses an enormous domestic production base, remains the world’s largest energy importer.
A heavier burden on its maritime energy imports would reinforce its efforts to secure more overland energy routes, larger strategic reserves and alternative suppliers.
India would face similar pressure, as higher energy costs would burden its trade balance, currency, inflation and public finances.
Europe and the Return of Energy Insecurity
For Europe, the imposition of fees in the Strait of Hormuz would revive fears of a new energy crisis.
Following the reduction of its dependence on Russia, the European Union increased the importance of liquefied natural gas and diversified maritime supplies.
A new burden on cargoes originating in the Persian Gulf would raise LNG prices and would particularly affect countries that lack sufficient domestic production or alternative energy sources.
The impact would not be limited to energy.
The Gulf states export petrochemicals, fertilizers and industrial raw materials. Any increase in their cost would be transferred to agriculture, construction, transport and manufacturing.
Greece as a Global Maritime Power
For Greece, the issue is of particular importance.
The Greek-owned fleet is one of the largest forces in the global merchant shipping industry and has a strong presence in the transportation of crude oil, petroleum products, LNG and dry bulk cargoes.
At first sight, an increase in risks and freight rates could generate higher revenues for certain shipowners.
However, this would not necessarily translate into higher net profitability.
These revenues would be accompanied by higher insurance premiums, financing costs, crew expenses, delay risks and potential losses.
In addition, Greek shipping companies would have to confront complex compliance questions.
Who would pay the fee: the shipowner, the charterer or the cargo owner?
Could it be considered a force majeure event?
Would it create a right to cancel a charterparty?
How would insurers and lenders treat it?
This uncertainty is often more burdensome than the fee itself, because it increases legal risk and makes contractual pricing more difficult.
For the Greek economy, there would also be a second effect: more expensive energy, higher transport costs and renewed inflationary pressure.
Therefore, even if one part of the shipping industry benefited from higher freight rates, the overall impact on the Greek economy could still be negative.
Norway, Denmark, Singapore and the United Kingdom
Other major maritime nations would face different types of consequences.
Denmark, with its strong presence in container shipping, would be affected through higher freight rates, delays and increased volatility on Asia–Europe routes.
Norway could benefit from higher energy prices as a producer, but its shipping and insurance companies would face greater operational risk.
Singapore, as a global maritime, trading and insurance hub, would confront higher volatility, a greater need for inventories and the redirection of trade flows.
The United Kingdom would experience significant effects through London, which remains a major centre for marine insurance, ship finance, arbitration and maritime services.
The Legal Precedent
Perhaps the most serious consequence would be the international precedent such a fee would create.
The International Maritime Organization has repeatedly affirmed that passage through international straits must remain unobstructed and free from tolls and discriminatory charges.
It has also warned that there is no legal basis for the unilateral imposition of tolls or other conditions on straits used for international navigation.
If it became accepted that a power with a military presence could charge for the protection of an international passage, what would prevent similar demands in the Strait of Malacca, Bab el-Mandeb, the Taiwan Strait or other critical routes?
Global trade could be transformed into a network of geopolitical toll zones, in which power would determine the price of passage.
From Freedom of Navigation to the Commercialization of Security
The imposition of fees in the Strait of Hormuz would mean that the security of navigation would cease to be regarded as an international public good and would instead become a marketable service.
This would be particularly self-defeating for the United States, whose economic and strategic power has for decades been based on open seas and freedom of navigation.
The imposition of such a fee would weaken the ability of the United States to oppose similar practices by other countries.
This is why replacing the original proposal with bilateral trade and investment agreements was more than a technical adjustment.
It was an attempt to avoid creating a precedent that could overturn the existing maritime system.
Predictability as the New Form of Maritime Power
For maritime nations, the essential good is not only freedom of passage.
It is predictability.
Shipowners can manage high costs, provided that they know what those costs are.
They can insure a risk, provided that it can be calculated.
They can renegotiate a contract, provided that the rules remain stable.
They cannot, however, operate efficiently when fees, exemptions and transit conditions change from one day to the next according to political statements or military developments.
Tolls in the Strait of Hormuz would not merely constitute a new tax on shipping.
They would represent a tax on predictability, energy security and global economic integration itself.
For countries such as Greece, whose economic strength and international presence are closely connected to the sea, defending freedom of navigation is not an abstract legal principle.
It is a fundamental national interest.
