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Home Market Research Business

Iran floats ‘insurance fees’ and asserts control over Hormuz

by TheAdviserMagazine
2 months ago
in Business
Reading Time: 3 mins read
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Iran floats ‘insurance fees’ and asserts control over Hormuz
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Iran sought to assert control over the Strait of Hormuz by saying that ships need its permission and mandatory insurance in order to cross, even as the US said that 20 ships had quietly sailed through overnight via a route along Oman’s coast. 

The conflicting signals come as the shipping industry tries to assess whether it’s safe to transit the world’s most important energy chokepoint and what sort of system will emerge after the US and Tehran reached an interim peace deal to reopen the strait. The number of ships crossing with their signals on dropped Friday after an initial surge, and after a report of a mine spotted near Oman’s coast.

But for many shippers and oil producers, Iran’s warning that it reserves the right to charge “insurance fees” threatens to crystallize a worst-case scenario: tolls on the Strait of Hormuz. 

The insurance policy required by Iran is currently free, but could involve charges in the future, the country’s Persian Gulf Strait Authority said in a document on its website. It also said that ships must follow a prescribed route that passes along its coast and that alternatives are prohibited.

Shippers and producers have grown increasingly concerned about the prospect that Iran will seek to toll the strait in future, after the memorandum of understanding signed with the US said only that transit would be free for the duration of its 60-day term.

Read: Vance Leaves Shippers in the Dark on Potential Iran Hormuz Tolls

US allies led by the UK are desperately pushing the Trump administration to not accept or normalize Iran’s attempts to try to introduce fees to pass the strait, according to a senior official. The industry has warned tolls would break with international maritime law and set a dangerous precedent that could be mirrored in other waterways.

“At present, this insurance is provided free of charge to the vessel owner, with all expenses covered by the Islamic Republic of Iran,” the Iranian document said. “The PGSA reserves the right to introduce insurance fees in the future, which will be determined by the relevant insurer. Owners will then be required to purchase and renew coverage accordingly.”

US Central Command later said in a statement that its forces would continue to operate to support freedom of navigation in the area, “without any arbitrary requirement claims or impediments.” 

It said that more than 20 vessels had traveled through the waterway overnight — implying they did so with their signals off. Even before the peace deal, a growing number of ships had been traveling “dark” through Hormuz with guidance and protection from the US. 

On Thursday, Western naval groups recommended the corridor along Oman’s waters as the main transit route, a sign that parallel shipping lanes could open up while a corridor in the middle of Hormuz is cleared of mines. 

Key Developments in HormuzVisible oil flows were more muted than Thursday, though at least two Indian supertankers were crossing; millions of barrels have transited dark in recent weeks meaning the figure could be higher.

One other Indian supertanker appeared to U-turn as it approached Hormuz, vessel tracking data showPakistan’s navy reported that a mine had been spotted near Oman’s coast, adding to the jeopardy of using the non-Iranian route.

Some ships reported hearing radio broadcasts from Iran that the waterway was closed Thursday, prior to a ceasefire deal between Israel and Hezbollah on Friday; Iran’s foreign ministry subsequently denied that the strait was closed.

Tankers with enough capacity to transport at least 20 million barrels of oil were detected leaving the Iranian port of Chabahar on the Gulf of Oman this week.

Single-Use Permit

The PGSA was created by Iran during the war but has since been sanctioned by the US. Iran’s neighbors have rejected its legitimacy and told shipowners not to interact with the body.

The document will do little to assure vessel owners who had already been seeking clarity on strait transits. There has been very limited demand to book tankers to load oil from ports in the Persian Gulf, a step that would need to happen for shipments from the export installations to happen, shipbrokers and tanker owners said Friday. 

Ships must submit requests to the PGSA to receive a passage permit and will typically receive a response within 48 hours, the document says. The pass will authorize one single transit through the strait, and is valid for five days from issuance. 

It also published a map of the routes Iran considers safe, and said that any deviation from its fixed corridor would be “treated as a violation.” 

On Thursday, western naval forces published co-ordinates of the route they recommend using when crossing Hormuz. They added at the time that maps of the latest known mine positions are also available on request. 



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Tags: AssertsControlFeesfloatsHormuzInsuranceIran
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