Iran has a new demand to end the war – and it could bring in billions

Mines, missiles and miles of coastline: Why Iran has the upper hand in the Strait of Hormuz

Iran’s strategy in the ongoing conflict has evolved, with a recent declaration from a government representative highlighting a new condition: acknowledging the Islamic Republic’s authority over the Strait of Hormuz. This narrow passage, crucial for a fifth of the world’s oil and liquefied natural gas (LNG), has become a pivotal tool for Tehran. The country now aims to leverage this control not only as a deterrent but also as a means to generate substantial revenue and exert economic pressure globally.

Historically, Iran has threatened to close the strait in response to attacks, but its current approach suggests a shift from mere intimidation to a calculated effort to disrupt trade. The recent disruptions in shipping through the chokepoint have sent shockwaves through global energy markets, prompting nations beyond the Persian Gulf to take urgent steps to secure fuel supplies. “Iran has underestimated how effective its strategy has been,” remarked Dina Esfandiary, Middle East lead at Bloomberg Economics. “The war has revealed a new form of leverage—using the strait as a bargaining chip for the global economy.”

“One of the lessons learned in the war is that it has discovered this new leverage, and it’s likely to use it again in the future. And I think monetizing it is part of discovering that it has this leverage,” Esfandiary added.

Washington is closely monitoring Iran’s move, with Secretary of State Marco Rubio cautioning against the potential of a tolling system at Hormuz. “Not only is this illegal, it’s unacceptable, and it’s dangerous to the world,” Rubio stated after a G7 meeting in France. The alliance emphasized the need to restore “safe and toll-free freedom of navigation” as a top priority.

Iran’s leadership has underscored the importance of maintaining control over the strait. Mojtaba Khamenei, the new supreme leader, highlighted in his first address that blocking the waterway remains a key tactic. Previously, Iran focused on sanctions relief and nuclear rights during negotiations, but the current demands signal a broader ambition to institutionalize maritime restrictions tied to geopolitical disputes.

Iranian lawmakers are drafting legislation that would require nations transiting the strait to pay tolls, while a supreme leader advisor mentioned a “new regime for the Strait of Hormuz” post-war. This system could enable Tehran to link access to critical shipping lanes with its international conflicts.

James Kraska, a professor of international maritime law at the US Naval War College, noted that imposing transit fees violates established norms. “There’s no legal basis under international law for a coastal state to charge fees in an international strait like Hormuz,” he explained. “The right of transit passage allows unimpeded movement for all states, regardless of territorial claims.”

Though neither Iran nor the US is a formal signatory to UNCLOS, its principles are widely accepted as customary law. Kraska acknowledged that Iran might leverage its non-membership to justify its demands. While there’s no clear precedent for such a system, Iran’s efforts to model it reflect a growing confidence in its strategic position.