Iran plans to offer insurance for Hormuz transit: Will it work?
Summary
Iran has created a new authority called the Persian Gulf Strait Authority to manage the Strait of Hormuz, a vital waterway for global oil and gas. It plans to offer insurance for ships passing through the strait, with payments possibly made in cryptocurrency, but many countries oppose Iran charging fees for transit.Key Facts
- The Strait of Hormuz is a key global passage, carrying about 20% of the world’s oil and gas during normal times.
- Iran’s Supreme National Security Council established the Persian Gulf Strait Authority to monitor the strait and provide updates.
- Iran intends to offer maritime insurance for ships crossing the strait, with payments in cryptocurrencies like Bitcoin.
- Iran has previously collected transit fees from some ships, seen by many as a toll or charge for passage.
- The United States and China oppose any country charging tolls or restricting free navigation through the strait.
- International law, specifically the United Nations Convention on the Law of the Sea, prohibits fees on ships passing through international straits.
- Iran says charging fees or offering insurance helps cover costs of damage from recent attacks by the US and Israel.
- Experts warn Iran may face legal and financial challenges in effectively providing this insurance service.
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