US President Donald Trump announced on the 13th (local time) that he would impose a 20% fee on all cargo passing through the Strait of Hormuz to recover costs of providing military protection to vessels using the waterway. Industry experts and shipping operators told the New York Times that the proposed toll could significantly raise the cost of transporting oil and other goods through the strait, potentially doubling current shipping expenses. The proposal has raised major concerns given the US has long supported freedom of navigation in the Strait of Hormuz and other waters.
Trump Announces 20% Toll on Hormuz Strait Cargo
Trump stated on the 13th that the US would impose a 20% fee on all cargo passing through the strait to recover the costs of military protection provided to vessels using the waterway. The president did not provide specific details on how the 20% toll would be calculated.
According to the New York Times, shipping operators and logistics experts said the toll would significantly increase the cost of transporting oil and other commodities through the waterway.
Industry Experts Calculate Toll Impact on Shipping Costs
Rico Luman, chief economist at ING, explained that tanker companies charge about $10 per barrel to transport oil from the Persian Gulf to Europe. Considering that the price of one barrel of oil is approximately $80, Trump's toll would add $16 per barrel for oil transport through the strait, raising the total transport cost to $26 per barrel.
For large tankers carrying 2 million barrels of oil, the analysis indicates that toll costs alone could exceed $30 million.
Experts noted that oil importers are likely to pass some of these costs on to consumers.
Vidya Mani, associate professor at the University of Virginia, stated that "a 20% toll would be a substantial cost" and noted that "the voluntary fee paid to pass through the Strait of Malacca in Southeast Asia is less than 0.5% of cargo value."
Shipping Operators Face Difficult Choices Under Proposed Fee
Neil Crosby, head of oil research at energy market analysis firm Sparta, expressed skepticism about whether the toll would actually be implemented, but said that if introduced, shipping operators would face difficult choices.
Crosby stated, "Shipping operators will have to decide whether to pay high fees and risk attacks from Iran, or ignore the US and cooperate with Iran."
He added, "The toll announcement, along with war, gives shipowners more reasons to feel anxious about operating in this region."
Some analysts questioned whether the toll would actually be introduced due to the costs it would create, but the fact that the US is pursuing the toll introduction and its enormous amount is raising significant concerns, according to reports.
FAQ
Q: What toll did Trump announce on the 13th (local time)?
A: Trump announced a 20% fee on all cargo passing through the Strait of Hormuz to recover the costs of providing military protection to vessels using the waterway.
Q: How much would the proposed toll increase oil shipping costs through the Strait of Hormuz?
A: According to ING's Rico Luman, the toll would add $16 per barrel to current $10 per barrel transport costs, raising total shipping costs to $26 per barrel. For large tankers carrying 2 million barrels, toll costs alone could exceed $30 million.
