Oman Proposes Hormuz Fee Plan After US-Iran War
Oman has formally proposed a plan — developed jointly with Iran — to collect fees from ships transiting the Strait of Hormuz, one of the world’s most critical maritime chokepoints, according to The New York Times. The proposal comes in the aftermath of a devastating US-Iran war that began on February 28, 2026, during which Iran effectively closed the strait to enemy and allied shipping, triggering a global energy crisis.
Context: The War and the Fragile Peace
The conflict, launched as Operation Epic Fury, saw US and Israeli strikes on Iran and a retaliatory Iranian blockade of the strait that cut traffic by 90-95%, creating a 13 million barrel daily oil shortfall. Roughly 20% of the world’s crude oil and liquified natural gas normally transits the Strait of Hormuz annually, according to France 24.
A Pakistan-mediated 14-point Memorandum of Understanding (MOU) signed in mid-June 2026 temporarily restored toll-free passage for 60 days. Under Article 5 of the MOU, Iran’s sovereignty over the strait is recognized, and Tehran is responsible for de-mining and removing military obstacles within 30 days. But the question of long-term governance — and whether ships will have to pay — remains highly contentious.
The Proposal: Service Fees, Not Tolls
Oman’s proposal draws inspiration from the Straits of Malacca and Singapore model, where a private foundation receives voluntary contributions for navigational safety services. Omani Foreign Minister Badr al-Busaidi has drawn a clear distinction between unlawful transit tolls and legitimate “maritime service fees” for navigational safety, environmental protection, and emergency response, as reported by Press TV.
On June 23, Iran and Oman announced the formation of a joint working group to discuss “the future administration of navigation in the Strait of Hormuz and the services that will be provided in this regard and the costs associated with them in accordance with international standards,” according to the New York Post.
However, a critical ambiguity remains. A regional diplomat cited by the NYT said fees would be voluntary, while an Iranian official insisted payments would be mandatory. Livemint reports that this unresolved question — voluntary vs. mandatory — will determine the plan’s legality and feasibility under international law.
Washington’s Red Line
The United States has vehemently opposed any form of toll or fee system. US Secretary of State Marco Rubio stated flatly that “no country is allowed to charge tolls or fees on an international waterway,” citing existing international law. President Donald Trump described any toll or fee proposal as “unacceptable” and threatened to “blow up” Oman if it tried to control the waterway alongside Iran. Treasury Secretary Scott Bessent has threatened sanctions against Muscat.
Rubio has also warned that Hormuz tolls would “spread like contagion” to other strategic waterways, raising the stakes far beyond the Persian Gulf.
Iran’s Position: No Return to Prewar Status
Iranian Foreign Minister Abbas Araghchi has stated that the Strait of Hormuz “will not return to its prewar status” when passage was free. Iran’s Deputy Foreign Minister Kazem Gharibabadi said Tehran’s priority is a joint mechanism with Oman, but warned Iran would act independently if no agreement is reached.
Iran is also pushing ships to purchase insurance through a newly formed Persian Gulf Strait Authority in Tehran. Western insurance underwriters are resisting compliance, fearing Iran will later jack up rates, according to the NY Post.
Oman’s Delicate Balancing Act
Oman practices a “friends to all, enemies to none” foreign policy. It is a longtime US ally that shares stewardship of the Strait of Hormuz but also maintains close ties with Iran. Al-Busaidi mediated unsuccessful talks between the US and Iran prior to the war.
Oman’s proposal — modeled on the Malacca Strait — may be an attempt to create a legally defensible framework that gives Iran some revenue while maintaining the appearance of compliance with international law. However, the country now faces intense pressure from both sides.
Regional Reactions
Other Gulf states are watching warily. Saudi Foreign Minister Faisal bin Farhan questioned the need for a new arrangement, asking: “Why should we now, as a result of a conflict, accept some novel arrangement that is going to be imposed on it?”
The 60-Day Window and What Comes Next
The current MOU provides a 60-day window of toll-free passage through mid-August 2026. During this period, US and Iranian negotiators — with Omani and Qatari mediation — must either reach a permanent agreement or risk a breakdown that could lead to renewed conflict. US envoys Steve Witkoff and Jared Kushner arrived in Qatar on June 30 for talks, underscoring the urgency.
For global energy markets, the stakes could not be higher. While Strait traffic has begun to recover after the MOU, it remains well below pre-war levels. The prospect of permanent fees — whether voluntary or mandatory — adds a new cost layer to global oil trade and could set a precedent for other strategic waterways.
The Bottom Line
Oman’s proposal represents a creative attempt to resolve an intractable problem: how to govern the Strait of Hormuz after a war that shattered the status quo. But with the US threatening sanctions and military action, Iran insisting on its sovereign right to charge, and the fundamental question of voluntary vs. mandatory fees unresolved, the path to a lasting agreement remains uncertain. The next 60 days will determine whether diplomacy prevails — or whether the strait becomes a flashpoint once again.