Iran's Toll on Global Trade: A New Era of Maritime Ransom

The Strait of Hormuz has been at the center of a geopolitical crisis that's affecting global trade and economies. The shutdown, in response to US and Israeli attacks on Tehran, has led to soaring oil prices. A new briefing by the Australian Strategic Policy Institute warns that allowing Iran to charge a toll for ships to pass through the strait could set a precedent for other countries to follow suit.

The Strait of Hormuz is a crucial waterway, with over 20% of the world's oil trade passing through it. The US Navy has been deployed to the strait as Washington seeks to guarantee that shipping lanes stay open. A toll charged by Iran could have far-reaching consequences for global trade and economies.

Australia is particularly vulnerable, as 25% of its GDP comes from exports, with over 99% of international trade moving by sea through the Strait of Hormuz. Indonesia has already floated a transit fee on the Malacca Strait, which carries two-thirds of Australian exports and 40% of imports.

The authors warn that consenting to or complying with a Hormuz passage charge could end global freedom of navigation. The precedent for other waterways is a 'larger strategic challenge,' particularly in the South China Sea, where China is already building artificial islands.