Buying certainty: How Hormuz is redefining global shipping

At the recent Lianhe Zaobao Singapore-China Forum 2026 in Singapore, Professor Joseph Liow, dean of the Lee Kuan Yew School of Public Policy and chairman of the Middle East Institute at the National University of Singapore, suggested that the Strait of Hormuz (SOH) may be entering a “new normal”, one in which Iran — and perhaps Oman — could justify charging vessels fees for transiting one of the world’s most important waterways. 

Yet whether such fees materialise matters less than the broader transformation his observation captures. The renewed cycle of US-Iran hostilities underscores how rapidly the commercial calculus surrounding the SOH can shift, from a global commons where passage has long been assumed to a managed corridor where uninterrupted access carries a price.

The emerging question extends beyond a new toll. It is whether commercial certainty has become something markets and states value — and pay for.

Viewed in this light, Hormuz points to a larger shift in the political economy of maritime commons. For decades, the world’s principal sea lanes operated on the understanding that secure navigation served the collective interest. 

Paying for confidence of safe passage

Charging ships to transit a maritime chokepoint would seem unremarkable. Vessels routinely pay tolls to use the Panama and Suez Canals, while user states contribute to navigational safety and environmental protection in the Strait of Malacca. But these arrangements rest on a fundamentally different logic. Canal tolls finance infrastructure and traffic management while compensating for services that facilitate commerce. Even cooperative arrangements in the Malacca Strait support public goods rather than monetise access.

Hormuz represents a different proposition. Any administrative charge, environmental levy, or security fee would derive its value less from infrastructure than from confidence that instability will not disrupt transit. Ships would be purchasing not simply access to a waterway, but greater confidence that passage will remain secure.

The legal framework also sets Hormuz apart. Under the transit-passage regime established by the United Nations Convention on the Law of the Sea (UNCLOS), ships and aircraft enjoy broad rights to move through international straits such as Hormuz. Those provisions leave limited scope for unilateral charges. Yet Liow’s observation highlights a growing divergence between legal rights and geopolitical leverage. As competition intensifies, coastal states’ ability to influence commercial traffic may shape market behaviour at least as much as formal rules.

For decades, the SOH operated on the simple assumption that commercial shipping would return to normal after periodic crises. Tanker wars, sanctions and Iranian threats did little to shake confidence in freedom of navigation, which was largely underwritten by American naval power.

That expectation is evolving. Insurers, shipping companies, commodity traders and governments now treat access to Hormuz less as a legal entitlement than as a continuously managed political risk. Passage depends on diplomacy, regional tensions and government calculations. Commercial actors continue moving energy through the SOH while adjusting to renewed military confrontation, diplomatic reversals, sanctions policy and evolving government calculations.

Price of passage rising

In other words, the price of passage is already rising, even in the absence of an official fee.

Commercial shipping absorbs that price through higher war-risk premiums, security measures, rerouting and larger inventories. Markets assign value to geopolitical assurance rather than transportation alone. A formal administrative levy would merely make explicit what commercial actors already price implicitly. The deeper implication is that access itself could become a source of political leverage.

Once confidence in access to a strategic waterway acquires an explicit political price, future crises could create opportunities for additional administrative requirements, security surcharges, differentiated treatment of commercial traffic, or new forms of political bargaining. 

Countervailing pressures, however, are also emerging. Since the crisis, a broad coalition of maritime powers has reaffirmed that freedom of navigation and the right of transit passage through international straits remain fundamental principles of international law. Joint statements by European and Asian governments have coupled support for restoring safe passage through the Strait of Hormuz with commitments to stabilise energy markets.

Renewed US-Iran fighting and actions like Washington’s suspension of oil-sales sanctions relief demonstrate how quickly commercial confidence surrounding Hormuz can deteriorate. Against this backdrop, Iran’s establishment of the Islamic Revolutionary Guard Corps’ Persian Gulf Strait Authority appears less an isolated initiative than part of a broader effort to convert strategic geography into political leverage. This possibility is no longer merely theoretical. The US Treasury has designated the body as a terrorism-financing entity rather than recognise it as a commercial toll collector. 

Short-term advantages for China

The episode illustrates a broader challenge. A fee regime would not simply create a cost of passage; it would become a mechanism for political differentiation. Friendly-state vessels could receive preferential treatment, while others could face higher fees or scrutiny. Even without becoming formal policy, the possibility alone can influence insurance, freight rates, and long-term investment.

For China, such an arrangement could offer short-term advantages while reinforcing a fragmented trading environment in which access depends more on political alignment than universally applied rules.

Such differentiation would transform access from a broadly available commercial service into another instrument of geopolitical influence. Even limited measures would encourage markets to price uncertainty more aggressively, while governments would accelerate efforts to diversify supply chains, expand strategic petroleum reserves, strengthen energy resilience and develop alternative transport corridors.

This evolution carries particular significance for Asia. Despite investments in strategic reserves, supplier diversification and contingency planning, China, India, Japan and South Korea remain dependent on Gulf energy. 

Beyond these measures, the region’s major importers are likely to deepen cooperation on maritime domain awareness, expand investments in LNG regasification and storage infrastructure, and accelerate the deployment of renewable energy, nuclear power, and electrification as part of broader efforts to reduce long-term exposure to maritime chokepoints.

A redefinition of maritime governance?

Military power alone offers only a partial response. The US retains unmatched capabilities to reopen the Strait during a major confrontation. Those capabilities remain indispensable, but commercial confidence depends on more than restoring navigation after a crisis. Energy markets respond as much to expectations regarding the durability of political arrangements as to physical disruptions, allowing uncertainty to influence prices before a single tanker is delayed.

Liow’s “new normal” deserves close attention regardless of whether Iran or Oman ever establishes a formal transit fee. The larger transformation lies in the growing recognition that uninterrupted access through Hormuz reflects strategic relationships, political calculations,and market confidence alongside international law. Panama and Suez monetise infrastructure. 

Hormuz has the potential to become the first major maritime chokepoint where geopolitical assurance itself acquires economic value. If confidence in uninterrupted transit becomes something that must be purchased, negotiated, or politically “earned”, the implications would extend well beyond the Gulf, reshaping expectations about how strategic waterways are governed and used during future crises.

That said, a wholesale shift toward politically conditioned access to strategic waterways remains unlikely. The legal framework governing international straits, along with the strong commercial and strategic interest in preserving predictable navigation, continues to support the existing order. More likely is a gradual change in practice as exceptional measures adopted during periods of crisis become more frequent or more widely accepted. The result would not be the replacement of the current maritime order, but its gradual evolution, as geography gives states controlling critical waterways greater influence over global commerce.

For decades, the price of oil reflected the risk of disruption in the Gulf. Today, markets increasingly price the durability of the political arrangements that keep Hormuz open alongside the risk of physical disruption. The next chapter may be one in which the price of passage — and the value of certainty itself — becomes a more visible feature of geopolitics.

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