On May 5, Iran did something no country has attempted since Denmark abolished the Sound Dues in 1857. It declared a natural international strait a toll road.
The Persian Gulf Strait Authority — PGSA — has a domain name (pgsa.ir), a contact email (info@pgsa.ir), and a 12-article statute moving through parliament. Vessels intending to transit Hormuz must now submit a Vessel Information Declaration covering ownership, insurance, crew manifests, cargo, and routing. A transit permit is issued only after the PGSA accepts the submission and a fee is paid. "Passage without permission will be considered illegal."
This is not a wartime improvisation. It is the institutionalization of a chokepoint.
The Five-Tier Nationality System
The PGSA does not charge a flat rate. It sorts the world's flags into a hierarchy of access:
This is not a tariff schedule. It is a foreign policy instrument built as maritime infrastructure. The PGSA converts geopolitical alignment into a shipping cost — literally pricing friendship.
The Sanctions Trap
On May 1, OFAC issued guidance that payments to the PGSA could constitute prohibited transactions under US sanctions. Any entity — American or foreign — that pays Iran's toll may face secondary sanctions. The IRGC, which retains seizure authority under the PGSA statute, is a designated Foreign Terrorist Organization.
This creates a compliance double bind that has no clean exit:
- OFAC secondary sanctions exposure
- Potential "material support for terrorism" liability
- Counterparty risk transmits upstream — charterers, traders, financiers, insurers all exposed
- Payment in yuan or Bitcoin bypasses SWIFT but creates separate regulatory trails
- IRGC interdiction — passage without permission is "illegal"
- 20% of cargo value confiscable as penalty
- Vessel seizure risk
- War-risk insurance premiums already 3-8% of vessel value ($3M-$8M per transit)
The result is predictable: Western-aligned tonnage avoids the strait entirely. Shadow fleet and BRICS-aligned vessels — already 80% of transits, up from 10-15% pre-war — absorb the tolls and keep moving. The strait bifurcates into two shipping regimes: one that pays Iran, and one that doesn't transit at all.
The Cost Stack
For a vessel that does transit, the total cost has multiplied beyond recognition:
| Cost Layer | Pre-War | Now |
|---|---|---|
| PGSA toll (VLCC) | $0 | up to $2M |
| War-risk insurance (% of vessel value) | 0.25% | 3–8% |
| Insurance bill (large tanker) | ~$250K | $3M–$8M |
| Transit time (Gulf → market) | normal | +10–15 days (reroute) |
| Effective shipping cost multiplier | 1× | ~2× or avoid |
JPMorgan estimates Iran could generate $70-90 billion annually at full toll rates on normal traffic volumes. Tehran metro billboards now advertise $100 billion. Whether those numbers are fantasy or forecast, they reveal what the PGSA is really for: converting wartime leverage into permanent revenue infrastructure.
The 1857 Precedent
The last time a sovereign nation successfully charged tolls on an international strait was Denmark, which collected Sound Dues on every vessel entering the Baltic from 1429 to 1857 — over four centuries. The dues were abolished only by a multilateral treaty in which 13 nations, led by the United States, paid Denmark a lump sum of 35 million rigsdaler to stop.
Iran's "Strait of Hormuz Management Plan" represents one of the most direct modern attempts by a state to monetise passage through a natural international strait since the abolition of Denmark's Sound Dues by multilateral treaty in 1857.
— Lexology, May 2026
The parallel matters because the Sound Dues worked. Denmark charged them for 428 years. They ended not because they were illegal — there was no UNCLOS in 1857 — but because a coalition of maritime powers decided the cost of paying a buyout was lower than the cost of continued tolls. Iran has studied the history. The PGSA is designed to be the institution that requires a buyout.
What Survives a Peace Deal
This is the question that makes the PGSA a supply chain story rather than a war story. If a ceasefire comes tomorrow, what happens to the toll plaza?
The 12-article statute is moving through Iran's parliament independently of any military negotiation. The PGSA has a bureaucracy, a website, a contact protocol, and — reportedly — a Bitcoin wallet. It is being legislated as permanent Iranian sovereignty over the strait, not as a wartime measure.
Three outcomes are possible:
Under scenarios 2 and 3, global shipping costs through the Gulf carry a permanent political surcharge. That surcharge flows through to oil, LNG, petrochemicals, fertilizer, and every commodity that transits Hormuz. Even Lloyd's List's editor estimates recovery to normal would take until at least September — and that assumes the toll mechanism is fully revoked, which no one has demanded yet.
The PGSA is the most important supply chain development of this war that isn't about bombs or barrels. It's about who controls the infrastructure of global trade, and whether a wartime improvisation can harden into a permanent institution. The strait is 21 nautical miles wide. Iran just put a tollbooth in the middle.