US oil bosses warn Donald Trump to block Iran’s Strait of Hormuz toll

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The US oil industry has warned Donald Trump not to allow Iran to impose a toll on tankers transiting the Strait of Hormuz as part of a future peace deal, arguing it would set a dangerous precedent for other countries.

Senior oil executives told the FT the only way to solve the energy crisis rippling across the world is to reopen the strait, a waterway through which a fifth of the world’s crude and liquefied natural gas typically flows.

But they said any outcome that left control of the strait in the hands of Iran could strengthen the regime, hurt industry and potentially embolden other governments including China to impose similar taxes on shipping.

“Imposing tolls at this critical global chokepoint would set a concerning precedent for international waterways and be detrimental for global energy markets,” said the American Petroleum Institute, the largest industry lobby group in the US.

Traffic through the waterway has slowed to a halt since the US and Israel launched their war against Iran, as the Islamic regime attacked vessels in the strait. The Iranian threat pushed up insurance premiums and caused shipping companies to avoid the chokepoint.

Tehran has since sought to charge a fee for vessels it allows to transit the strait, and has signalled that it wants to implement a tolling system even if the war ends. Trump made reopening the strait a condition of the fragile two-week ceasefire the US agreed with Iran on April 8.

US oil bosses are set to speak to the US president on Thursday afternoon and are expected to discuss reopening the strait and freedom of navigation as well as efforts to boost oil production.

Scott Sheffield, one of the US industry’s longstanding leaders, said Trump had to solve the problem of the strait to protect the world economy from much higher oil prices, even if it meant putting US military forces on the ground. 

“We can’t let the Mullahs control with tolls the Strait of Hormuz. We can’t let the [Islamic Revolutionary Guard Corps] control the Strait of Hormuz. We have to open that up. It’s got to be probably a joint force with Europe and with Asia eventually to open that up and with the other Persian Gulf countries,” he said.

Sheffield, who lived in Iran before the Iranian Revolution in 1979, said the US should do everything it can to control the strait with joint forces, even if it meant “putting troops on the ground around the strait”.

Trump suggested last week that the US could join Iran in jointly tolling ships passing through the strait, saying there was “big money” to be made. But he later backtracked, saying in a social media post that Iran had “better not” charge fees to tankers passing through it. 

The president’s comments have prompted the oil industry to step up lobbying efforts aimed at persuading the White House to stand firm in a new round of negotiations with Tehran, expected soon.

A White spokeswoman said: “As the president stated, the Strait of Hormuz is international water, and we are not going to let Iran toll the strait.”

Oil producers in the Gulf states have also emphasised the importance of reopening the strait without allowing Iran to extract tolls.

“The Strait of Hormuz has never been Iran’s to close or restrict,” said Sultan al-Jaber, head of the Abu Dhabi National Oil Company, in a social media post on Sunday.

“Any attempt to do so is not a regional issue; it is the disruption of a global economic lifeline and a direct threat to the energy, food and health security of every nation. Setting such a precedent is illegal, dangerous and unacceptable.”

The US and Iran held talks in Islamabad last weekend, but there were few signs of progress. Trump then ordered the US navy to blockade the strait to prevent ships entering or leaving Iranian ports.

Many US oil executives were stunned at comments from TotalEnergies chief executive Patrick Pouyanné on Monday that reopening the strait with a toll was preferable to it staying closed.

“Turning the Strait of Hormuz into an Iranian canal is massively dangerous in itself,” said Daniel Yergin, vice-chair of S&P Global and author of The Prize: The Epic Quest for Oil, Money and Power. “It also risks becoming a precedent for upending the principle of freedom of the seas.”

Additional reporting Myles McCormick