Iran establishes PGSA to manage transit permits and oversight; experts warn fees could fund Revolutionary Guards

Ships navigate the Strait of Hormuz. [Reuters]
Ships navigate the Strait of Hormuz. [Reuters]

Iran has reaffirmed its plan to collect fees from vessels transiting the Strait of Hormuz.

Appearing to anticipate international pushback, Tehran framed the charges not as tolls but as payment for navigation support and security services.

Iranian Deputy Foreign Minister Kazem Gharibabadi told the semi-official Mehr News Agency on Thursday that "Iran and Oman hold sovereignty over the Strait of Hormuz," outlining the fee plan, according to CNN.

Gharibabadi said Iran intends to charge for services provided jointly with Oman, including navigational assistance, search and rescue, security guarantees and environmental cleanup.

While stopping short of calling the charges a formal toll, Iran would collect fees in exchange for those services. He acknowledged the system would not fully satisfy all countries but maintained it was consistent with international law.

Iran established the Persian Gulf and Sea of Oman Authority (PGSA) last month, citing the need to manage transit through the strait.

Through the PGSA, Iran plans to oversee new transit rules for the Strait of Hormuz, including advance screening of vessels, traffic management and fee collection.

The stance signals that Iran intends to maintain its grip over the strait even after any resolution of its dispute with the United States.

Gregory Brew, a senior analyst at Eurasia Group, said Iran had demonstrated its ability to close the strait even under heavy bombardment by the United States and Israel. "This is Iran's new nuclear option," he said.

Control over the Strait of Hormuz — through which 20 percent of the world's crude oil passes — carries strategic value comparable to that of a nuclear weapon, Brew argued.

Some in the energy industry argue that resuming transit, even at a cost, is economically preferable to a full closure of the strait. Since alternative export routes — such as pipelines bypassing Hormuz — cannot be built quickly, paying a fee to restore passage is the more practical near-term option.

Iran is reported to have charged vessels transiting the strait approximately $2 million per passage.

Wood Mackenzie estimated that fees at that level would push international oil prices up by roughly $1 per barrel.

The United States, however, has strongly opposed the plan.

The US Treasury Department's Office of Foreign Assets Control recently designated the PGSA as a sanctions target, characterizing it as an organization established in collusion with Iran's Islamic Revolutionary Guard Corps (IRGC) to extort commercial vessels passing through the strait.

Washington believes revenue the PGSA collects through transit fees could flow to the IRGC, which the United States has already designated as a foreign terrorist organization.

The US government has warned that it may impose secondary sanctions on foreign shipping companies that provide cash, goods or virtual assets to the PGSA in exchange for transit permits through the Strait of Hormuz.


mokiya@heraldcorp.com