The Toll at the World's Oil Chokepoint: How Iran Turned the Strait of Hormuz Into a Cryptocurrency Toll Booth — and Why the US Can't Stop It

In the first half of 2025, approximately 20.9 million barrels of oil per day flowed through the Strait of Hormuz, a 21-mile-wide channel between Iran and Oman that carries roughly a third of the world's seaborne crude [1]. By March 2026, that figure had collapsed to an estimated 3.2 million barrels per day [2]. The difference — some 17 million barrels daily — represents the largest sustained disruption to global energy supplies since the 1973 Arab oil embargo.

The cause is not a natural disaster or an accident. It is a toll booth.

Since mid-March, Iran's Islamic Revolutionary Guard Corps has demanded payment of up to $2 million per tanker for passage through the strait, accepting Chinese yuan routed through Kunlun Bank via CIPS — outside the SWIFT network — or cryptocurrency, including Bitcoin and USDT [3]. On March 30, Iran's parliament codified the arrangement into law with the "Strait of Hormuz Management Plan," formalizing what had already been operating for weeks [4]. The system represents the first time a state has used cryptocurrency as a sovereign payment mechanism at a major maritime chokepoint.

The United States insists the tolls are illegal and has made their removal a central condition of a fragile ceasefire reached on April 7. President Donald Trump, in a Truth Social post on April 10, said Iran was "doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz. That is not the agreement we have!" [5]

But as of mid-April, the tolls remain in effect, the ceasefire is fraying, and the world's major oil importers are splitting into those willing to pay and those refusing — with no clear path to resolution.

How the Crisis Began

The Strait of Hormuz has been a source of geopolitical tension for decades, but the current crisis traces directly to February 28, 2026, when the United States and Israel launched coordinated airstrikes against Iran [6]. The campaign, which killed Supreme Leader Ali Khamenei, triggered an immediate response from the IRGC, which declared the strait closed to Western-allied shipping [6].

Over the following weeks, Iran launched 21 confirmed attacks on merchant vessels and reportedly laid sea mines in the traditional shipping lanes [6]. The IRGC released alternate routing maps directing vessels northward through Iranian waters rather than the customary Omani coastal route, citing "the likelihood of the presence of various types of anti-ship mines in the main traffic zone" [7]. By early March, Brent crude had risen from $71 per barrel on February 27 to $94 by March 9, eventually reaching approximately $112 by March 28 — a 58% increase in under a month [2].

The toll system emerged during this period not as a sudden announcement but as an evolving practice. Ship operators seeking passage began receiving demands from IRGC-linked intermediaries for payment, with fees starting at $0.50–$1.00 per barrel of crude cargo [3]. For a fully loaded Very Large Crude Carrier (VLCC) carrying roughly two million barrels, that translated to approximately $2 million per transit [4].

Source: EIA

Data as of Apr 1, 2026CSV

The Toll Mechanics: Yuan, Bitcoin, and a 96-Hour Window

The toll system operates through a registration and vetting process that Iran has progressively formalized. Tanker operators email Iranian authorities with cargo details, crew lists, flag registration, AIS tracking data, and destination ports up to 96 hours before intended transit [4]. Iranian officials respond with a quoted toll — typically $1 per barrel — and crews transfer the payment in Bitcoin, USDT, or Chinese yuan to an Iran-controlled account [3].

The choice of payment currencies is strategic. Yuan payments are routed through Kunlun Bank, a Chinese state-owned institution that has long served as a conduit for Iran-China trade outside Western sanctions infrastructure [3]. Cryptocurrency payments bypass the dollar-based financial system entirely, creating what blockchain analytics firm TRM Labs has called "a sanctions-resistant toll collection mechanism" [8].

Iran's parliamentary legislation specifies fees in rials but authorizes "digital currencies" as payment [4]. At full capacity, the system could generate $20 million per day from oil tankers alone, and $600–$800 million per month if liquefied natural gas vessels are included [3].

Iran has also developed a selective access system. Countries including China, India, Pakistan, Iraq, and Malaysia have entered direct negotiations with Tehran for transit arrangements [9]. China, as the largest buyer of Iranian crude — purchasing more than 80% of Iran's oil exports — has received preferential treatment, with at least two tolls reportedly paid in yuan during the early weeks of the system [7].

What UNCLOS Says — and What Iran Argues

The legal battle over Hormuz tolls centers on Part III of the United Nations Convention on the Law of the Sea (UNCLOS), which establishes the regime of "transit passage" for international straits — defined as straits connecting one area of the high seas or exclusive economic zone to another [10].

Under UNCLOS Articles 37 and 38, all ships and aircraft enjoy the right of transit passage through such straits, and coastal states bordering the strait may not "hamper" or "suspend" that passage [10]. Article 26 prohibits charges "by reason only of their passage" through territorial waters, permitting fees only for specific services rendered to the transiting vessel, applied without discrimination [10].

The legal position of the United States and most Western maritime powers is straightforward: the Strait of Hormuz is an international strait under UNCLOS, Iran has no right to impose tolls, and the toll system is illegal [11].

Iran's position is more layered. Tehran has signed but not ratified UNCLOS, which Iran argues limits the convention's binding authority [12]. The Iranian parliament's Security Commission has asserted Iran's "sovereign role" over its territorial waters in the strait [4]. And some Iranian legal scholars have advanced a countermeasure argument: that decades of US sanctions — which Iran characterizes as an illegal economic blockade — justify extraordinary measures in response [13].

This countermeasure theory has some grounding in international law. The International Law Commission's Articles on State Responsibility allow states to take otherwise unlawful actions as countermeasures against prior wrongful acts, provided the countermeasures are proportionate and reversible. However, 100 international law scholars and analysts — including Tess Bridgeman, Mike Schmitt, and Ryan Goodman — have assessed that the US-Israeli air campaign itself rests on an "exceptionally weak legal foundation," which Iran may cite to bolster its claim that extraordinary defensive measures are warranted [13].

Yet most legal scholars outside Iran reject the countermeasure argument as applied to transit passage. The critical distinction is that tolls on Hormuz do not solely affect belligerents — they impose costs on every nation whose oil transits the strait, including states with no involvement in the conflict. As the Just Security analysis noted, "a questionable jus ad bellum basis for the conflict does not trigger suspension of transit passage rights that affect belligerents and non-belligerents alike" [13].

"Not the Agreement We Have": The Ceasefire and Its Contradictions

On April 7, Trump announced a two-week ceasefire, suspending planned strikes on Iranian infrastructure. The condition, as Trump stated on Truth Social: the "COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz" [14]. White House press secretary Karoline Leavitt specified that the strait must be opened "without limitation, including tolls" [15].

Iran's Foreign Minister Abbas Araghchi offered a different interpretation: safe passage would be possible "in coordination with Iran's Armed Forces and with due consideration of technical limitations" [7]. The gap between "without limitation" and "with due consideration of technical limitations" proved immediately consequential. Only 3–5 ships transited the strait in the days following the ceasefire announcement, and Iran closed the waterway again on April 8 after a large Israeli airstrike on Beirut, calling it a violation of the deal's terms [16].

Trump's reference to an "agreement" Iran is violating appears to be the ceasefire itself, not a prior nuclear or sanctions deal. No formal treaty or binding agreement on Hormuz transit existed before April 7 [5]. Iran's 10-point counterproposal, however, goes far beyond the strait: it demands withdrawal of US combat forces from all regional bases, lifting of all sanctions, release of frozen Iranian assets, and full payment of war-related damages, alongside a "protocol for controlled passage" through Hormuz [16].

Negotiations were scheduled for April 10 in Islamabad, Pakistan, but the ceasefire's survival remains in question [16].

Who Pays, Who Refuses, and What It Costs

The toll system has created a de facto sorting mechanism among the world's major oil importers.

Source: EIA / CNBC

Data as of Mar 1, 2026CSV

Japan faces the most acute vulnerability, with approximately 75% of its oil imports transiting Hormuz [17]. South Korea follows at 70%, India at 60%, and China at 40% [17]. The Middle East supplies 75% of Japan's oil and roughly 70% of South Korea's [17]. Both countries also depend on Gulf liquefied natural gas: South Korea sources 14% of its LNG from Qatar and the UAE, while Japan sources 6% [17].

China, despite its lower percentage dependence, is the largest single importer in absolute terms, accounting for 37.7% of all Hormuz crude flows [17]. Beijing has used its status as Iran's primary oil customer to negotiate favorable transit terms. India, the second-largest destination at 14.7% of flows, has also entered direct talks with Tehran [9].

The countries that have refused to engage with the toll system — principally the United States, United Kingdom, Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Jordan — have found themselves unable to force the issue through the UN Security Council [7]. A resolution calling for reopening the strait "by all necessary means" was supported by 11 Security Council members but vetoed by Russia and China [7].

Oman, which shares sovereignty over the strait's southern shore, has rejected the toll regime. Transport Minister Said Al-Maawali stated that Oman had "signed all international maritime transport agreements" prohibiting passage fees [7].

Among shipping companies, the picture is murkier. Bloomberg reported in early April that ships were paying tolls in yuan and cryptocurrency for safe passage, though specific company names have not been publicly confirmed [3]. The toll collection operates through IRGC-linked intermediaries, and the opacity of cryptocurrency transactions makes full tracking difficult. Blockchain analytics firms including Chainalysis and TRM Labs have been monitoring on-chain flows to Iran-associated wallets [8].

Historical Precedents: From the Sound Dues to Suez

Iran's toll regime has no precise precedent, but several historical parallels offer instructive comparisons.

The closest analogy is Denmark's Sound Dues, imposed on ships transiting the Øresund strait between Denmark and Sweden from 1429 to 1857 [18]. At their peak, the tolls constituted up to two-thirds of Danish state revenue, enforced by cannons at Helsingør that could sink ships refusing to stop [18]. The system was abolished by the Copenhagen Convention of 1857, under which major maritime powers paid Denmark a lump sum of 33.5 million rix-dollars — roughly 12 years' worth of toll revenue — to buy out the regime permanently [18].

The Sound Dues case is historically significant for demonstrating that economic compensation, not military force, ultimately resolved the dispute. But it also unfolded over four centuries in a pre-UNCLOS world. Modern maritime law was written explicitly to prevent such regimes from recurring.

The Suez Canal and Panama Canal offer a different template: both charge significant transit fees, but both are man-made waterways governed by their own treaties and requiring ongoing maintenance [12]. The Strait of Hormuz is a natural waterway. Turkey's Bosphorus and Dardanelles collect administrative fees under the 1936 Montreux Convention, which UNCLOS Article 35(c) explicitly exempts from standard transit passage rules [12]. No such exemption applies to Hormuz.

The 1956 Suez Crisis, when Egypt nationalized the canal and precipitated a military intervention by Britain, France, and Israel, offers perhaps the most relevant political parallel. In that case, international pressure — led by the United States and Soviet Union — forced the withdrawing powers to accept Egyptian control. The lesson some analysts draw: military responses to waterway disputes tend to produce unpredictable escalation, and economic or diplomatic resolution ultimately prevails.

The Military Option and Its Limits

Trump signaled as early as March 3 that the US Navy might escort tankers through the strait [19]. Treasury Secretary Scott Bessent stated the US would provide escorts and war insurance to oil tankers [20]. But the Navy itself has been less optimistic.

Energy Secretary Chris Wright acknowledged on March 12 that the US was "not ready" to escort tankers, saying "It'll happen relatively soon but it can't happen now" [21]. Navy officials described the strait as an Iranian "kill box," noting that Iran had struck more than 20 commercial vessels since the conflict began, killing at least seven sailors [22]. The Defense Department assessment — internally dubbed "Operation Epic Escort" — found that mine clearance alone could take weeks, and that escort operations would require force levels not currently deployed in the region [23].

The legal threshold for military escort operations is also contested. Under international law, the right of transit passage gives warships the legal basis to transit the strait. Escorting commercial vessels is a step further — a practice with precedent in the 1987–88 "Tanker War," when the US Navy escorted reflagged Kuwaiti tankers through the Persian Gulf during the Iran-Iraq War [24]. But active mine clearance and engagement with IRGC naval forces would bring the operation closer to what some international law scholars would classify as an act of war, particularly if Iran frames its toll system as a lawful exercise of sovereignty rather than an act of belligerency.

Pentagon planners have war-gamed multiple escalation scenarios, though specific rules of engagement remain classified. The core dilemma is straightforward: the narrow strait, Iranian coastal missile batteries, fast-attack boats, and mine-laying capabilities create a confined operating environment where even a limited confrontation could produce rapid escalation [22].

The Steelman Case for Iran

Among non-Western analysts and some international legal scholars, there is a more sympathetic reading of Iran's position — though few endorse the toll system as legally sound.

The argument proceeds as follows: Iran has endured decades of US sanctions that have crippled its economy, restricted its access to global financial systems, and — in Iran's framing — constituted a form of economic warfare that predates any Iranian provocation in Hormuz [13]. The February 2026 air campaign, which killed Iran's head of state and destroyed critical infrastructure, was assessed by a substantial group of legal scholars as resting on weak legal grounds [13]. In this context, Iran's toll demand can be read as a form of economic self-defense — a means of generating revenue for reconstruction while asserting leverage in negotiations.

Mohammad Eslami, a research fellow at the University of Tehran, and Zeynab Malakouti of the Global Peace Institute have argued that Hormuz control is not merely a wartime tactic but "how Iran wins the aftermath" — a mechanism for securing a lasting end to hostilities and rebuilding the country's economy [25]. Iran's 10-point proposal, which pairs Hormuz tolls with demands for sanctions relief and reparations, reflects this logic [16].

Critics of this framing note that even if the underlying grievances are legitimate, the toll system imposes costs on uninvolved third parties — Japan, South Korea, India, and dozens of other nations — making it a blunt instrument that undermines any claim of proportionality. The precedent it sets, if accepted, could embolden other coastal states to impose tolls on international straits, fundamentally altering the maritime order that has governed global trade since the mid-20th century [12].

What Comes Next

The immediate question is whether the April 7 ceasefire can survive its own contradictions. The US demands unrestricted, toll-free passage. Iran demands recognition of its "sovereign role" and a protocol for controlled transit. These positions are not obviously reconcilable.

The broader question is whether the toll regime — even if formally ended through negotiation — has already established a precedent. If Iran successfully collects hundreds of millions of dollars in tolls over a period of weeks or months, other nations may draw conclusions about what is possible when a coastal state controls a chokepoint and faces no effective enforcement of international maritime law.

The Sound Dues lasted 428 years before the international community paid Denmark to stop. The modern system of freedom of navigation was built to ensure that would never happen again. Whether that system can withstand a war, a toll booth, and a cryptocurrency wallet remains an open question.