Donald Trump wants to put a toll booth on the ocean. Specifically, he wants to put it on the Strait of Hormuz, the narrow stretch of water through which a fifth of the world's petroleum flows.
The proposal is classic Trump. It is transactional, brash, and highly disruptive. He argues that the United States military spends billions of dollars protecting shipping lanes in the Middle East, only for tankers to transport oil directly to American competitors like China. His solution is simple. We blockade Iran, secure the strait, and start charging foreign merchant vessels a fee for safe passage.
It makes for a great campaign line. It sounds business-savvy to a crowd of taxpayers tired of foreign entanglements. But once you look at the actual mechanics of global shipping, international law, and naval warfare, the plan falls apart.
Let's look at what this proposal actually means, why it is legally and physically impossible to pull off without starting a world war, and what maritime operators must do to prepare for this brand of protectionist foreign policy.
The mechanics of the world's most volatile choke point
You cannot talk about global energy security without talking about the Strait of Hormuz. It is the ultimate geographic choke point.
At its narrowest, the strait is only 21 miles wide. The actual shipping lanes used by massive supertankers are even narrower. We are talking about two miles of inbound lanes, two miles of outbound lanes, and a two-mile buffer zone separating them.
[ Iran Coastline ]
--------------------------------------
Inbound Shipping Lane (2 miles)
--------------------------------------
Buffer Zone (2 miles)
--------------------------------------
Outbound Shipping Lane (2 miles)
--------------------------------------
[ Oman Coastline / Musandam Peninsula ]
Every single day, roughly 20 million to 21 million barrels of crude oil, condensate, and refined petroleum products pass through this tiny gap. If you shut down the strait, you freeze a huge portion of global trade instantly.
Trump's core complaint is that the U.S. Navy acts as a free security guard for the rest of the world. He is not entirely wrong about who benefits. The vast majority of the oil passing through the strait does not go to the United States. Thanks to the shale revolution, America is largely energy independent. Instead, that oil goes to Asia. China, India, Japan, and South Korea are the primary consumers of Persian Gulf crude.
Under the proposed plan, if a Chinese state-owned tanker wants to pass through the strait, it would have to pay a toll to the U.S. Navy. If it refuses, the Navy would deny it entry or refuse to protect it from Iranian aggression.
The international law problem
There is a massive legal barrier to this plan. It is called the United Nations Convention on the Law of the Sea, or UNCLOS.
Even though the United States has never formally ratified UNCLOS, the U.S. Navy treats its rules as customary international law. The key concept here is transit passage.
Under transit passage rules, all ships and aircraft enjoy the right of unimpeded navigation through straits used for international navigation. The Strait of Hormuz falls directly into this category. The shipping lanes themselves actually sit within the territorial waters of Oman and Iran. Ships have a legal right to pass through without being stopped, taxed, or blocked by a third-party nation.
If the U.S. Navy begins stopping civilian merchant vessels in the strait to demand toll payments, the U.S. would become the biggest violator of maritime law on earth. It would destroy the very legal framework that the Navy has spent eighty years defending.
For decades, the U.S. has sailed warships through the South China Sea to challenge China's illegal territorial claims. We call these Freedom of Navigation Operations. The moment we start blockading the Strait of Hormuz to shake down commercial ships for cash, we lose all moral and legal authority to tell Beijing they cannot claim international waters.
The historic precedent of the Tanker War
We have seen what happens when shipping in the Gulf gets targeted. During the Iran-Iraq War in the 1980s, both sides began attacking commercial tankers in the Gulf. This period became known as the Tanker War.
To protect Kuwaiti tankers from Iranian attacks, the U.S. launched Operation Earnest Will in 1987. We reflagged Kuwaiti tankers as American ships so the U.S. Navy could legally escort them.
That operation was incredibly dangerous and expensive. It led to direct military clashes, including the mining of the USS Samuel B. Roberts and the subsequent U.S. retaliatory strike, Operation Praying Mantis, which destroyed half of Iran's navy.
But even during the height of that conflict, the U.S. never charged for escort services. The goal was to keep the global economy stable. Charging a toll turns a security mission into a mercenary operation.
The military reality of an Iranian blockade
A naval blockade is not a passive security guard duty. Under international law, a blockade is an act of war.
If the U.S. blockades Iran and begins policing the strait, Iran will react. They will not just watch silently from the northern shore.
Iran has spent thirty years building an asymmetric military designed specifically to shut down the Strait of Hormuz. They know they cannot beat the U.S. Navy in a traditional surface battle, so they rely on a different playbook:
- Sea Mines: Iran has an inventory of thousands of smart, bottom-dwelling mines that are incredibly difficult to detect and clear. A single mine explosion can halt all traffic in the strait for weeks.
- Swarm Boats: The Islamic Revolutionary Guard Corps Navy operates hundreds of fast, armed patrol boats. They can overwhelm a destroyer by attacking from all angles simultaneously.
- Anti-Ship Missiles: Iran's coastline is lined with mobile missile launchers. Their Fateh and Khalij Fars missiles can target ships across the entire width of the strait.
- Suicide Drones: Cheap, low-flying drones can target the bridge or superstructure of a tanker, causing catastrophic fires.
A blockade would turn the Persian Gulf into a hot combat zone. Shipping companies would not pay a U.S. toll; they would simply refuse to enter the Gulf altogether. Insurance companies would pull war risk coverage instantly.
The global economy would experience a supply shock unlike anything we have seen since the 1973 oil crisis. Oil prices would skyrocket past $150 a barrel, dragging the global economy into a severe recession.
Who wins and who loses?
If you map out the chess board, Trump's proposal backfires on the very people it is supposed to help.
China is the world's largest oil importer. They rely heavily on the Gulf. If the U.S. blockades the region and demands tolls, Beijing will not just open its wallet. They will use the crisis to expand their own military footprint.
China has already established its first overseas military base in Djibouti, right on the Horn of Africa. If the U.S. stops guaranteeing free transit through Hormuz, China will have the perfect excuse to deploy its own carrier strike groups to the Arabian Sea to escort their tankers. It would hand Beijing control over the Indian Ocean shipping lanes on a silver platter.
Our allies in the region, like Saudi Arabia and the United Arab Emirates, would also suffer. They depend on the strait to export their wealth. A blockade would choke their economies, forcing them to look for alternative security partners, potentially turning toward Russia or China.
Practical steps for maritime operators and energy traders
Whether you think Trump's proposal is a brilliant negotiation tactic or a reckless foreign policy idea, the fact that a prominent political figure is openly discussing it means maritime risk profiles have changed.
The era of assuming ocean shipping lanes will always remain free and open is over. You must actively prepare for a more fragmented, nationalistic maritime environment.
1. Map out bypass pipeline capacity
If the Strait of Hormuz becomes too dangerous or expensive, you must look at overland routes. There are only two major pipelines that currently bypass the strait:
- The East-West Pipeline (Saudi Arabia): This pipeline can carry about 5 million barrels per day from the Eastern Province oil fields to the Red Sea port of Yanbu.
- The Abu Dhabi Crude Oil Pipeline (UAE): This pipeline can transport up to 1.5 million barrels per day from the Habshan fields to the port of Fujairah, which sits safely outside the strait on the Gulf of Oman.
If you are sourcing oil from the region, prioritize contracts that load at Fujairah or Yanbu to avoid Hormuz entirely.
2. Lock in long-term war risk insurance rates
Insurance is the silent gatekeeper of global trade. The moment tensions rise in the Gulf, underwriters increase their "Additional Premium" rates for war risks. If a blockade or toll system is seriously debated in Washington, these rates will jump before a single ship even changes course. Lock in long-term shipping contracts with fixed insurance clauses now.
3. Plan for alternative supply chains
If you run a business that relies on raw materials or components shipped through the Indian Ocean, begin diversifying your supply chain. Look for suppliers in Southeast Asia, West Africa, or South America that do not rely on Middle Eastern energy inputs or shipping routes that pass through geopolitical choke points.
The threat of a militarized toll system in the Strait of Hormuz proves that global trade is no longer insulated from populist politics. You cannot afford to wait for the first warning shot to build your backup plan.
