Iran Insists on Hormuz Transit Fees, Offering China Special Terms

Iran’s ambassador to China said July 5 that Tehran will “definitely” charge service fees for ships transiting the Strait of Hormuz, offering preferential rates to China and other “friendly” nations — a statement that places Iran on a collision course with Washington over a core provision of the June ceasefire accord, and arrives as U.S.-Iran talks are paused for the week-long funeral of Supreme Leader Ali Khamenei.

Speaking at the World Peace Forum in Beijing, Ambassador Abdolreza Rahmani Fazli said Iran was working with Oman on “new arrangements” for the waterway. He described the fees as covering security supervision of vessel passage, tracking, and environmental compliance. He was careful not to call them a toll, framing the charges as service fees rather than transit levies. He added that countries which had “stood by” Tehran during the conflict would receive “special considerations” — naming China as a likely beneficiary.

Beijing imports roughly one-tenth of its crude oil through the strait and has maintained close economic and diplomatic ties with Iran throughout the fighting. China’s prospective preferential status gives Tehran both political cover and a potential wedge against a unified Western position in negotiations.

What the Memorandum of Understanding Requires

The June 17 memorandum of understanding, signed after six weeks of U.S.-Israeli strikes on Iranian infrastructure and IRGC attacks on U.S. bases in the Persian Gulf, established a 60-day ceasefire window for final-status negotiations. Among its fourteen points, the accord required free commercial transit through the strait for the duration of the talks.

U.S. Treasury Secretary Scott Bessent warned that Washington would “aggressively” sanction Oman if it facilitated any Iranian fee mechanism for the strait. The State Department has stated that no final deal will permit mandatory transit charges of any kind.

Iran’s position is that the strait passes through its territorial waters, giving Tehran sovereign authority to regulate passage. U.S. negotiators counter that the waterway is an internationally recognized strait governed by customary international navigation law, which does not support compulsory fees on global sea lanes.

The Oman Variable

Oman occupies the strait’s southern coastline and has historically served as a diplomatic back-channel between Washington and Tehran. It has been discussing what it characterizes as a “voluntary service fee” framework with Iran — a framing that is deliberate. Oman cannot afford a direct confrontation with the United States, while Iran’s transitional leadership cannot be seen surrendering the strait’s strategic leverage without receiving something in return.

The distinction between voluntary and compulsory matters legally and diplomatically. Iranian officials have described the eventual charges as mandatory. U.S. officials have said any language in existing MOU side-discussions refers only to optional maritime services. That gap has not been bridged.

Iran’s new acting Supreme Leader Mojtaba Khamenei remains in an undisclosed location after reportedly being wounded in the February strikes that killed his father. His absence from public view has concentrated public-facing Iranian diplomacy in the hands of figures like Ambassador Rahmani Fazli and Foreign Minister Abbas Araghchi, making it harder to determine whether the fee-forward posture reflects a settled government position or a negotiating probe.

Oil Markets

Brent crude futures fell 0.33 percent to $71.88 a barrel on July 6, after OPEC+ agreed over the weekend to raise production targets by 188,000 barrels per day from August. WTI settled near $68.40. Recovering Hormuz traffic and the supply increase have so far capped any upward price pressure from the fee dispute.

The contrast with the conflict’s peak is stark. Brent reached nearly $150 a barrel in March, when Iran’s IRGC was actively interdicting commercial shipping and war-risk insurance premiums on tanker hulls climbed to 2.5 to 5 percent of vessel value per transit — approximately $5 million per very large crude carrier. Strait traffic had recovered to roughly 30 crossings per day by late June, according to shipping-industry monitoring services, compared with fewer than five during peak disruption. That figure still represents less than one-quarter of the pre-conflict baseline.

A permanent fee mechanism, if implemented, would effectively restore a layer of transit cost on top of normalized Brent prices — not at the crisis levels of March, but enough to increase friction for every cargo that passes through the waterway.

The Diplomatic Context

China’s direct interest in the Hormuz fee structure gives Beijing leverage over the final shape of U.S.-Iran negotiations. Throughout the war, China has positioned itself as a neutral mediator while deepening energy ties with Tehran — a posture that mirrors its approach to Russia’s war in Ukraine, where Beijing has avoided direct military involvement while maintaining economic lifelines to Moscow. For Washington, the risk is that China’s role as a prospective fee beneficiary draws it into the negotiations as an interested party rather than a neutral broker.

The Trump administration is simultaneously managing fragile ceasefire arrangements on other contested fronts, and the Hormuz fee dispute adds a commercial pressure point that could harden Iranian domestic opposition to a final deal at a moment when Tehran’s new leadership is politically vulnerable and the succession is unsettled.

China’s own calculations about the value of regional stability versus the value of preferential access will shape whether Beijing uses its position to push Iran toward compromise or to entrench Tehran’s bargaining posture heading into the next round.

What to Watch July 11

Talks are scheduled to resume July 11 in Doha, facilitated by Qatar. Three variables will determine whether the fee dispute becomes a deal-breaker: whether Washington accepts any version of “voluntary service fees” as legally distinct from mandatory tolls; whether Oman can sustain diplomatic ambiguity between the two parties; and whether China pushes Iran toward a workable compromise or reinforces its maximalist position.

The last time the Strait of Hormuz was subjected to sustained transit disruptions — during the 1980s Tanker War — the resulting conflict ran for three years and required an extensive U.S. naval escort presence to resolve. Both governments have powerful economic reasons to avoid a repeat. Whether their domestic political constraints leave room to find middle ground is the central question heading into next week.