Iran's Hormuz toll plan bars Israeli ships, sets terms for US and allies

Ali Nikzad, the first deputy speaker of Iran’s parliament, said during a visit by members of parliament’s Construction Commission to Bandar Abbas that the 12-point plan would deny passage to Israeli ships “at any time.”

He said vessels belonging to “hostile countries” would also be barred from crossing the strait unless they first paid compensation for damage caused during the war.

He did not name any country other than Israel, but Iranian officials have used similar language in the past to describe the United States and some of its Arab allies in the Middle East as hostile states.

Two months into the US-led war with Iran, the vital waterway remains closed, choking off 20% of the ‌world's oil and gas supplies. The strait was effectively closed after Iran started launching retaliatory strikes against its Arab neighbors in the Persian Gulf.

Since April 13, the United States has also imposed a naval blockade on Iranian ports, further restricting traffic through the strait with the aim of preventing Tehran from turning the waterway into a source of leverage or revenue.

Terms for non-hostile countries

Under the toll plan being reviewed by the parliament, other ships would be required to obtain permission from Iran before passing through Hormuz, Nikzad said.

He added that the measure would be adopted in line with international law and the rights of Iran’s neighbors, while insisting that Tehran would not return the strait to its pre-war status.

“We will not give up our rights in the Strait of Hormuz, and the movement of vessels through the Strait of Hormuz will not be the same as before the third imposed war,” he said.

He described Iran’s proposed new control over Hormuz as comparable in importance to the nationalization of the oil industry in 1951.

Mohammadreza Rezaei, head of parliament’s Construction Commission, said all ships applying for permission to pass through the strait would be required to use the name “Persian Gulf.”

He said 30% of the revenue collected from ships would be allocated to strengthening military infrastructure, while 70% would go to economic development and public welfare.

“Managing the Strait of Hormuz is more important than acquiring nuclear weapons,” Rezaei said.

While Tehran hopes its new toll system will compensate for part of the heavy damage caused by the US-led war, Washington has warned that companies and governments paying Iranian-imposed tolls could face sanctions.

Iran has briefed foreign ambassadors in Tehran on its latest proposal to end the US-led war, saying the plan has been submitted to Pakistan as mediator and that Washington must now choose between diplomacy and confrontation.

Kazem Gharibabadi, Iran’s deputy foreign minister for legal and international affairs, met foreign ambassadors based in Tehran on Saturday to discuss what he described as Iran’s proposal to end the “war and aggression” by the United States and Israel.

Gharibabadi said Iran was fully prepared to repel any attack against the country and its people, while adding that Tehran still believed in diplomacy based on national interests.

“The Islamic Republic of Iran has submitted its plan to Pakistan as mediator with the aim of permanently ending the imposed war, and now the ball is in America’s court to choose the path of diplomacy or the continuation of a confrontational approach,” he said.

He added that Iran was prepared for both scenarios in pursuit of its national interests and security, while maintaining what he called its “pessimism and mistrust” toward the United States and Washington’s sincerity in diplomacy.

Before the meeting with foreign envoys, the ambassadors of China and Russia also held a trilateral meeting with Gharibabadi.

A provincial Revolutionary Guards commander said Iran wants the United States to “make a mistake” and test its power on the ground, after claiming Washington had already been defeated at sea and in the air.

Rostam-Ali Rafiei Atani, commander of the Revolutionary Guards in Qazvin province, said: “We hope America makes a mistake and tests its power on the ground as well. It was defeated at sea and in the air, and we would like it to test itself on the ground too.”

He added that “the greatest achievement of this war is that no one trusts America anymore,” claiming the conflict had “shattered America’s hollow power.”

Iran has begun curbing oil production as the US naval blockade tightens around its oil trade, with exports plunging, storage filling and tankers gathering near the country’s main export hub, Bloomberg reported.

The blockade, which took effect on April 13, has left Tehran trying to manage a pressure campaign aimed at its most important source of revenue. Bloomberg said the war has entered a stalemate, with Washington betting that lost oil revenue will force Iran to yield and Tehran betting it can outlast the economic pain and keep global energy prices elevated.

A senior Iranian official told Bloomberg that Tehran is proactively reducing crude output to stay ahead of storage limits rather than waiting for tanks to fill completely. The official said the move could affect as much as 30% of Iran’s oil reservoirs, but argued the risks were manageable because Iranian engineers have years of experience idling and restarting wells under sanctions.

“We have enough expertise and experience,” said Hamid Hosseini, a spokesman for the Iranian Oil, Gas and Petrochemical Products Exporters’ Association. “We’re not worried.”

Bloomberg said Iran’s oil sector had remained resilient before the blockade, producing about 3.2 million barrels a day in March, with exports close to prewar levels. But the current blockade is different from earlier sanctions pressure because the US is physically trying to block waters around the Strait of Hormuz, stranding tens of millions of barrels at sea.

Since the blockade began, Iran has increasingly turned to floating storage. Bloomberg said aging and in some cases derelict tankers have gathered near Kharg Island, Iran’s main export terminal in the Persian Gulf.

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The blockade, which took effect on April 13, has left Tehran trying to manage a pressure campaign aimed at its most important source of revenue. Bloomberg said the war has entered a stalemate, with Washington betting that lost oil revenue will force Iran to yield and Tehran betting it can outlast the economic pain and keep global energy prices elevated.

A senior Iranian official told Bloomberg that Tehran is proactively reducing crude output to stay ahead of storage limits rather than waiting for tanks to fill completely. The official said the move could affect as much as 30% of Iran’s oil reservoirs, but argued the risks were manageable because Iranian engineers have years of experience idling and restarting wells under sanctions.

“We have enough expertise and experience,” said Hamid Hosseini, a spokesman for the Iranian Oil, Gas and Petrochemical Products Exporters’ Association. “We’re not worried.”

Bloomberg said Iran’s oil sector had remained resilient before the blockade, producing about 3.2 million barrels a day in March, with exports close to prewar levels. But the current blockade is different from earlier sanctions pressure because the US is physically trying to block waters around the Strait of Hormuz, stranding tens of millions of barrels at sea.

Since the blockade began, Iran has increasingly turned to floating storage. Bloomberg said aging and in some cases derelict tankers have gathered near Kharg Island, Iran’s main export terminal in the Persian Gulf.

US Treasury Secretary Scott Bessent said this week that Kharg Island was “soon nearing capacity,” warning that the pressure could cost Iran about $170 million a day in lost revenue and force Tehran toward negotiations.

“It looks like there’s been a significant slowdown in production,” Antoine Halff, co-founder and chief analyst at Kayrros, said on a conference call. “There is stress in the system.”

If storage fills completely, Iran would have little choice but to cut production by the amount it can no longer export. Based on prewar domestic consumption of about 2 million barrels a day, Bloomberg said that could leave fields operating at roughly half their potential.

Iran could try to move some oil overland to Turkey, Pakistan, Afghanistan and Uzbekistan, Hosseini said, but he put that capacity at only 250,000 to 300,000 barrels a day.

Other options, including rail shipments of some oil products to China, may be difficult and less economical. Bloomberg added that Chinese “teapot” refineries rely on discounted crude and thin margins, while the U. Treasury has also imposed new sanctions on individuals and networks tied to Iran’s “shadow banking” system, including buyers linked to those refineries.

Analysts said Iran still has tools to keep parts of the system running. Vortexa estimates Iran has access to 65 million to 75 million barrels of floating storage capacity, equivalent to roughly 37 very large crude carriers, both inside and outside the blockade.

That capacity may buy Tehran time, but how much depends on how strictly the US enforces the blockade.

Claire Jungman, director of maritime risk and intelligence at Vortexa, told Bloomberg that Iran’s use of floating storage, ship-to-ship transfers and older tankers means its system has not fully broken.

“This allows flows to continue in the near term, even under tighter enforcement,” she said. “We would frame this as a constrained but functioning system, rather than a full disruption.”