Tehran has taken a significant step in asserting control over the Strait of Hormuz by formally establishing the Persian Gulf Strait Authority (PGSA), a body tasked with managing ship transits and collecting passage fees. The announcement, made via a new official X account on Monday by Iran's Supreme National Security Council, codifies a system that has reportedly been operational since March, according to Iranian state media.
Under the new regime, vessels seeking to navigate the strait must apply through the PGSA's official email, providing detailed documentation including ownership, insurance, crew manifests, cargo declarations, and intended routing. A transit permit is issued only after approval and payment of a fee, though no official tariff has been published. Reports indicate that some ships have already paid up to $2 million (€1.7 million) per transit, with payments made in Chinese yuan.
The PGSA functions as an administrative interface with the Islamic Revolutionary Guard Corps (IRGC) Navy, which physically controls transits through the waterway. The IRGC is designated a foreign terrorist organization by the United States and the European Union, among others. This development follows weeks of confusion and danger for ships in the strait, after Tehran announced in March it would charge for safe passage, leading to fraudulent operators offering unofficial transit paperwork in exchange for cryptocurrency payments. The PGSA appears designed to replace that grey market with a single official channel.
Legal and Diplomatic Fallout
Under the United Nations Convention on the Law of the Sea (UNCLOS), the Strait of Hormuz falls under the transit passage principle, which guarantees uninterrupted international shipping. Iran signed but never ratified the convention. The US, Gulf states, and European countries have all rejected the legality of Iran's fee regime, insisting that free navigation must be maintained without additional charges or restrictions.
Ebrahim Azizi, chairman of Iran's parliamentary National Security and Foreign Policy Committee, stated in a televised interview that Tehran had prepared a mechanism to manage Hormuz traffic through a designated maritime route, with further details to be announced. He wrote on X that only commercial vessels cooperating with Iran would benefit from the mechanism and that charges would apply. Meanwhile, billboards in Tehran's metro system claim Iran could generate up to $100 billion annually from Strait of Hormuz revenues, a figure that has circulated in Iranian media alongside proposals to monetize data cables running through the waterway. This echoes earlier reports from Iran's IRGC-linked media pushing for fees on internet cables.
The waterway, around 35 kilometres wide at its narrowest point, carried roughly one-fifth of the world's seaborne oil and liquefied natural gas before Iran effectively closed it to commercial shipping when the war began on 28 February. The US Navy imposed its own blockade of Iranian ports on 13 April. US outlets reported that the number of oil tankers gathered around Kharg Island—Iran's main crude export terminal—had reached its highest level since the US naval blockade began, suggesting mounting pressure to move stranded oil exports.
Iran's Tasnim news agency reported on Monday that US oil sanctions could be suspended at least during negotiations, while reiterating Tehran's demand for their full removal. Pakistani media outlets separately claimed that Islamabad had conveyed a revised Iranian proposal to Washington, with Pakistan's Prime Minister Shehbaz Sharif expressing optimism about the resumption of talks. The crisis has also prompted diplomatic efforts from other quarters, including China's offer to mediate and Qatar's warnings against using the strait as leverage.
For European nations, the implications are profound. The Strait of Hormuz is a critical chokepoint for energy supplies, and any disruption directly impacts European economies. The EU's designation of the IRGC as a terrorist organization further complicates the situation, as European shipping companies may face legal risks if they engage with the PGSA. The bloc has consistently called for maintaining free navigation, and this latest move by Iran is likely to intensify diplomatic pressure on Tehran.
