- The prospect of fees to transit the Strait of Hormuz has sparked alarm, not least by investors who fear it could be replicated in other maritime corridors.
- Janiv Shah, vice president of commodity markets at Rystad Energy, told CNBC that some investors were starting to get “a little bit jittery” about the possibility of tolls in the Strait of Malacca.
- The waterway provides the shortest sea route from East Asia to the Middle East and Europe.
Iran’s push for control over the Strait of Hormuz has prompted some energy market participants to worry about the introduction of tolls on the Strait of Malacca, one of the world’s most important energy and trade choke points.
It follows reports that Iran and Oman, which sit on opposite sides of the Strait of Hormuz, have presented the U.S. with a proposal to jointly administer the narrow maritime corridor, including the collection of administrative fees.
The U.S. and Iran agreed in a memorandum of understanding last month that ships could safely and freely navigate the waterway for 60 days. The Strait of Hormuz typically handles around 20% of the world’s oil traffic.
Thereafter, the future administration and maritime services of the strait will be defined by Iran and Oman after talks with other Persian Gulf states, “in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz.”
The notion of some sort of service plan to transit the Strait of Hormuz has sparked alarm across the globe, not least by investors who fear it could be replicated in other strategically vital maritime corridors.
Maritime experts, however, have said they remain deeply skeptical about the prospect of fees being introduced in the Strait of Malacca.
Janiv Shah, vice president of commodity markets at Rystad Energy, said some investors were starting to get “a little bit jittery” about the prospect of an oil shock in the form of tolls in the Strait of Malacca.
“I think part of the reason here is, if we see a potential toll booth with Iran, sort of, enacting upon the Strait of Hormuz, that something similar could be enacted on others, and of course, the most important from a volume metric perspective is … the Strait of Malacca,” Shah told CNBC’s “Squawk Box Europe” on Monday.
“The way that it will be enacted, of course, I’m unfortunately unable to share a little bit more on that, but it probably will take a lot of time because it is, from a volume metric perspective, significant,” he added.
The Strait of Malacca, which is the primary choke point in Asia and Oceania, accounted for 29% of total maritime oil flows in the first half of 2025, according to the U.S. Energy Information Administration.
Crude oil is estimated to make up just over 70% of total oil flows through the waterway each year, with petroleum products accounting for the remainder.
Spanning about 900 kilometers, the waterway provides the shortest sea route from East Asia to the Middle East and Europe. It is bounded by Indonesia, Thailand, Malaysia and Singapore.
Strait of Malacca: A choke point, not a flashpoint
In April, Indonesia’s Finance Minister Purbaya Yudhi Sadewa suggested the country could introduce tolls on ships using the Strait of Malacca, before walking back the idea. Indonesia’s coastline forms the entire southern edge of the Strait of Malacca.
The establishment of a tolling system would be illegal under international law, which guarantees free passage through straits used for international navigation.
Indonesia President Prabowo Subianto and Singapore Prime Minister Lawrence Wong both reaffirmed their commitment to the unimpeded passage of vessels through the strait shortly after a meeting in Indonesia’s capital on Monday.
Hunter Marston, director of the Southeast Asia program at the Sydney-based Lowy Institute, said in a note published June 23 that while the Malacca Strait “easily” meets the definition of a choke point, it is not a flashpoint.
“Institutions matter,” Marston said, pointing out that the Malacca Straits Patrol (MSP) ensures the waterway remains open to global trade. The MSP is jointly managed by four states: Indonesia, Malaysia, Singapore and Thailand.
“The arrangement benefits all parties as well as the global economy. Without this institution, the Malacca Strait would be just as vulnerable to capricious closure as the Strait of Hormuz,” he added.
Rerouting options
Analysts at the Center for Strategic International Studies (CSIS), a Washington-based think tank, said Iran’s actions regarding the Strait of Hormuz had showcased that controlling a maritime choke point could “significantly augment” a country’s power and deterrence.
The stakes are “even higher” in the South China Sea, analysts at CSIS said, particularly given the existence of two strategically important waterways that connect many of the world’s major economic centers: namely, the Strait of Malacca and the Taiwan Strait.
“Iran’s efforts to control and toll traffic through the Strait of Hormuz have renewed fears that states could try to do the same to the Malacca Strait. China’s threats to use force against Taiwan have also put the Taiwan Strait at the epicenter of one of the world’s most high-stakes geopolitical hotspots,” analysts at CSIS said in an analysis published July 1.
“If either of these two major straits is interrupted, rerouting options exist, but they will come at a cost,” they added.
