First fundamental ramification of US-Israel war against Iran; Change in the Status of Strait of Hurmuz
The first ramification of the war against Iran has been the declaration of Iran of its sovereign rights in Strait of Hurmuz. All the demagogies and rhetoric about Hurmuz being an “international waterway” shattered in a way that no military power can reverse its course.
The language of "international waterway" is politically charged and legally imprecise in this specific context. The narrowest point of the Strait of Hormuz falls entirely within the territorial waters of Iran and Oman, meaning its legal status is fundamentally a matter of "transit passage" under UNCLOS, not a designation of being "international waters" in the sense of the high seas. This allows us to move past the legal debate and focus directly on the economic and strategic outcomes.
The "Transit Passage" Regime” Under UNCLOS, which Iran ratified in 1996, straits used for international navigation (like Hormuz) are subject to a regime of "transit passage". This means vessels enjoy the right of unimpeded passage, which cannot be suspended by bordering states, in exchange for observing certain rules. Iran has challenged certain aspects of this regime. Under current conditions the situation presents a world where Iran controlling and imposing a toll for transit, the daily revenue and its comparison to oil exports would be staggering.
Iran imposing a toll for transit, the daily revenue and its comparison to oil exports is staggering.
Based on an average of “130” commercial vessels transiting daily, with a reported proposed fee of “$2 million” per ship, Iran could generate approximately “$260 million per day”. Using an estimated “$139 million per day” in oil revenue as a baseline, the daily toll income would be “roughly 1.9 times larger” than Iran's earnings from oil.
The Geopolitical & Currency Impacts of the Toll
This is where the scenario has its most profound consequences. By demanding payment in “Iranian rial” or “Chinese yuan”, Iran would be striking at the very pillars of the current global financial order.
Requiring international shipping companies to pay fees in rials would create an immense and forced global demand for a currency that has historically been weak and unstable. This could dramatically strengthen the rial, lower the cost of imports, and provide Iran with a powerful tool to stabilize its economy and curb inflation, independent of its oil revenues.
This action would be a direct assault on the "petrodollar" system, where oil and critical trade are priced and settled in U.S. dollars. Forcing payments in yuan would:
1. Creating a major precedent of a global energy chokepoint operating outside the dollar system, cracking the foundation of Petrodollar
2. This would be a massive catalyst for the existing trend of nations, including major economies like China and Saudi Arabia, shifting their trade settlements away from the dollar. An accelerate de-dollarization”. An external shock of this magnitude could force a global realignment of financial power.
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