The Current Status Quo
Anyone who imports goods from overseas as part of their routine business operations understands the huge number of associated fees and costs. However, one fee that is rarely discussed is the cost of tolls on international shipping. This is largely because only two key routes incur them; the Suez Canal (connecting the Mediterranean to the Red Sea) and the Panama Canal (connecting the Pacific and Atlantic Oceans). Although these waterways demand tolls as high as £1m for large container vessels, they still see enormous maritime traffic every year. So, why would imposing tolls in the Strait of Hormuz be such a big deal? The answer is both simple and complex. The Strait of Hormuz is a ‘natural’ waterway, considered by the international community to be governed under UNCLOS (United Nations Convention on the Law of the Sea). Therefore, any restriction on the freedom of navigation for civilian vessels should be prohibited. What happens, then, if Iran succeeds in imposing transit tolls?
A Dangerous Precedent
The Strait of Hormuz is not the only natural waterway that sees massive maritime traffic each year. There are arguably four other international waterways that handle equivalent, or even higher, volumes of vessels: the Malacca, Bab al-Mandeb, and Turkish Straits, as well as the English Channel. see table below
| Waterway | Approx Vessel Count / Year | Cargo / Trade Significance |
| Strait of Malacca | 94,000 | 25-30% of all global maritime trade |
| English Channel | 60,000 | One of the highest density waterways on the planet |
| Turkish Straits | 30-40,000 | Key Black Sea-Mediterranean Sea route |
| Bab El-Mandeb Strait | 25,000 | Major Asia-European trade route, substantial oil traffic |
| Strait of Hormuz | 35-40,000 | Approx 25% of all global maritime oil trade |
If Iran successfully enacts tolls in the Strait of Hormuz, it would set a dangerous international precedent. Nations bordering other key waterways could easily follow suit, creating a world where vessels face multiple toll restrictions on a single journey. This would undoubtedly push up the baseline cost of international shipping, driven not only by the tolls themselves but also by elevated insurance premiums. There has already been fierce condemnation of the proposal; most notably, the International Maritime Association stated at a recent summit on freedom of navigation: ‘There is no legal basis for any country to introduce payments or impose tolls, fees, or discriminatory conditions on straits.’
Why This Matters to Supply Chains and Your Bottom Line
Whilst the aforementioned waterways may handle equal or greater traffic, arguably none are more critical to international supply chains and food production than the Strait of Hormuz. This is due to the nature of its cargo: 95% of transit volume consists of oil, gas, and chemical products used to manufacture fertilisers. These commodities form the baseline cost for almost all supply chains, having an amplified impact on agriculture due to its heavy reliance on both fuel and fertiliser. According to the US Energy Information Administration (EIA), approximately 20.9 million barrels per day (mb/d) flowed through the Strait in the first half of 2025—roughly 20% of global petroleum-based energy consumption and 25% of global maritime oil trade. Any additional costs imposed on such a vast share of the global oil trade will undoubtedly drive up supply chain costs across the board, particularly for both domestic and imported food. The UK is disproportionately exposed to these increases; the Department for Environment, Food and Rural Affairs (DEFRA) placed the value of UK imported food at £64.1bn in 2024, with fruit (84%) and vegetables (47%) being the most vulnerable categories. A recent UN publication on Strait of Hormuz disruptions reinforces this: ‘Higher energy, fertilizer and transport costs – including freight rates, bunker fuel prices and insurance premiums – may increase food costs.’ The historical causal relationship between fuel inflation and food prices is illustrated in the graph below from that same report.
If Iranian tolls are fully enacted in the Strait of Hormuz, they will impose an additional transaction cost on the foundation of the global economy. Ultimately, this move would likely have the most outsized impact on global food and goods supply chains of any waterway toll on the planet.
