The operator of an oil tanker anchored in the Persian Gulf recently received a specific offer: it could transit the Strait of Hormuz, escorted by the Iranian Navy, in exchange for changing its registration, raising the flag of a country Iran considers friendly, and paying a fee. The offer came through the government of Pakistan, which had negotiated safe passage for 20 Pakistani-flagged vessels, according to a company executive who spoke to Insurance Journal on condition of anonymity. Pakistan, finding it had more passage slots than Pakistani-flagged ships, began reaching out to major commodity traders to see if their vessels could temporarily re-flag under Pakistani registry to use the slots.
That arrangement is one window into the broader system that the Islamic Revolutionary Guard Corps has been building at the Strait of Hormuz since the war began on February 28. Over the past 35 days, what started as an improvised blockade has become something considerably more formal: a state-operated geopolitical tollbooth, backed by Iranian parliamentary legislation, operating with explicit pricing, specific payment currency requirements, and a structured vetting process. Iran's National Security Committee approved a bill formalizing the fee structure, the semi-official Fars news agency reported, citing a committee member.
How the System Works: Step by Step
The operational mechanics of the Hormuz toll system have been described by multiple people with direct knowledge of shipping negotiations, speaking on condition of anonymity to Insurance Journal, gCaptain, and Bloomberg. Their accounts are consistent.
Step 1 — Application. A ship operator seeking to transit the strait contacts an intermediary company linked to the IRGC. The operator must provide: the vessel's ownership structure, flag state, cargo manifest, destination port, crew list, and AIS (Automatic Identification System) transponder data showing the ship's position history.
Step 2 — Vetting. The intermediary passes the file to the IRGC Navy's Hormozgan Provincial Command for a background check. The central question is whether the vessel, its owner, its insurer, or any entity in its commercial chain has any link to the United States or Israel. Iranian authorities apply a ranking system of one to five for countries — with ships from nations Iran considers friendly receiving better terms, shorter waits, and lower fees. Ships from countries Iran considers hostile are denied passage entirely.
Step 3 — Negotiation. If the vessel passes vetting, discussions over the toll begin. For oil tankers, the starting price in negotiations is approximately $1 per barrel of oil, paid in Chinese yuan or stablecoins — cryptocurrencies pegged to the value of a hard currency such as the U.S. dollar. A very large crude carrier (VLCC), the standard ocean-going supertanker, typically carries around 2 million barrels of oil. At $1 per barrel, the base transit fee for a fully loaded VLCC would be approximately $2 million. Fees can rise significantly from the base, depending on the vessel's geopolitical profile and the ranking of its flag state.
Step 4 — Clearance. Once the toll is paid, the IRGC issues a permit code and specific route instructions. Ships are expected to raise the flag of the nation that negotiated their passage agreement. In some cases, vessels are required to change their official registration entirely to that country — a significant legal and commercial step. As the vessel approaches the strait, it broadcasts its passcode over VHF radio and is met by an IRGC patrol boat, which escorts it through the passage close to the Iranian coast, in the waters near a cluster of islands that shipping industry sources have taken to calling "the Iranian tollbooth."
At least two vessels have already completed this process and paid in yuan, according to Yahoo Finance and gCaptain, both citing commodity finance sources.
The Yuan and Stablecoin Requirement
The payment currency requirement — yuan or stablecoins, no U.S. dollars — is not incidental. It reflects Iran's deliberate effort to route the financial flows from Hormuz outside the U.S.-dominated dollar clearing system, making them immune to Treasury Department interdiction and SWIFT-based sanctions enforcement.
China's yuan is already the dominant currency in Iran's legitimate trade, given the depth of sanctions on dollar transactions. The acceptance of stablecoins — cryptocurrency tokens pegged to fiat currencies and settled on blockchain networks — adds a layer of further resilience. Stablecoin transactions settle on decentralized ledgers with no central clearinghouse that the U.S. Treasury can pressure.
Lloyd's List Intelligence, the maritime research firm, described the arrangement to CNBC as Iran having imposed "a de facto toll booth regime in the Strait of Hormuz." The Atlantic Council separately reported that select vessels are being routed through Iranian territorial waters near Larak Island, off the coast of Bandar Abbas, Iran's main port city on the strait.
The Pakistan Flag Case: A Case Study in the System
The Pakistan arrangement, described by Insurance Journal, illustrates how the system works in practice at the country level.
Iran agreed to allow 20 Pakistani-flagged vessels to transit the strait as part of bilateral diplomatic arrangements. Pakistan found it had more passage clearances than Pakistani-flagged ships in the region. Islamabad then began reaching out to major oil trading houses — including at least two of the world's largest commodity traders, according to Insurance Journal — to see if their vessels could temporarily re-flag under Pakistani registration to use the approved slots.
This arrangement, if executed, would involve the commodity trader temporarily changing a ship's legal registry to Pakistan, sailing it under Pakistani colors through the strait, and then re-registering back to its original flag. Pakistan's Ministry of Maritime Affairs did not respond to requests for comment from Insurance Journal.
The arrangement failed to materialize in the case described — the company was unable to complete the re-flagging in time — but it illustrates the commercial creativity the system is inducing. Country-level passage slots are becoming a tradeable commodity, with neutral or Iran-friendly countries holding inventory that other nations' shipping companies want to access.
The Broader Picture: From Blockade to Governance
The formalization of this system connects directly to developments covered separately this week: Iran's Deputy Foreign Minister Kazem Gharibabadi announced that Iran is drafting a permanent peacetime protocol with Oman to jointly oversee Hormuz maritime traffic after any war settlement. And former Foreign Minister Mohammad Javad Zarif's ceasefire proposal in Foreign Affairs on Friday explicitly included Hormuz reopening as an Iranian concession — implying Iran treats its control of the strait as a bargaining chip with real value, not simply a wartime tactic to be abandoned whenever fighting stops.
The combination of a formal toll system, a parliamentary bill backing it, active enforcement with payment already received, and a parallel diplomatic track to institutionalize oversight post-war represents a coherent strategy. Iran is not trying to permanently close the strait — that would collapse the economies of Qatar, Saudi Arabia, the UAE, and Kuwait, nations with which Iran has complex relationships. It is trying to convert temporary wartime leverage into permanent structural power over the world's most important energy corridor.
Ship transits through the Strait of Hormuz have increased slightly over the past week, according to vessel tracking data cited by Insurance Journal and gCaptain — but remain a fraction of pre-war levels. The partial opening is a feature, not a bug: Iran needs some ships transiting to demonstrate the system works, generate revenue, and maintain relationships with friendly states.
What Cannot Transit
Iran has been explicit about the other side of the system. Ships with any ownership, flagging, insurance, or commercial link to the United States or Israel are barred from transit entirely. The Washington Times reported Friday that Iran's stated policy is to block all U.S.- and Israel-linked vessels while charging tolls to the rest. Lloyd's of London and other major marine insurers have been heavily involved in discussions about which vessels can be insured for Hormuz transit given the IRGC vetting requirements and the potential for Iranian seizure of vessels that fail vetting.
The practical effect is a bifurcated strait: open for a price to ships from neutral or Iran-friendly nations, closed entirely to ships linked to the belligerents. The 40-plus country coalition convened by the United Kingdom on April 2 — which included ministers from across Europe, Asia, and the Pacific — met specifically to discuss "every possible diplomatic, economic and coordinated measure" to pressure Iran to reopen the strait, per UK Foreign Secretary Yvette Cooper. Military planners from the coalition were set to convene separately. None of those meetings have yet produced a plan that Iran has agreed to.
Scale: What a VLCC Toll Costs in Context
A very large crude carrier carries approximately 2 million barrels of oil. At $1 per barrel, that is a $2 million fee per transit — consistent with the earlier informal $2 million per ship figure reported at the war's start, and confirming that the per-barrel pricing and the per-ship pricing are describing the same approximate transaction. A VLCC chartered for a Middle East to Asia run typically earns $40,000 to $80,000 per day in charter rates during normal times; with the Iran war, spot rates have spiked significantly. A $2 million toll represents a large but potentially survivable surcharge for cargoes worth $200 million or more at current oil prices.
The Strait of Hormuz normally handles approximately 21 million barrels of oil per day, along with massive volumes of liquefied natural gas from Qatar. At $1 per barrel, if the strait were to return to something approaching normal traffic under the toll system, Iran would be collecting roughly $21 million per day in transit fees — denominated in yuan or crypto, outside the dollar system, flowing directly to the IRGC.
Iran has turned the Strait of Hormuz from a shipping lane into a toll road. The fee is $1 a barrel, payable in yuan or stablecoins. You need a permit code. You need an IRGC escort. You need to fly a friendly flag. And you need to not be American or Israeli. That is the system that is operating right now — and Iran just passed a law to make it permanent.