Before the Iran War broke out the Strait of Hormuz operated as one of the world's critical international waterways, functioning under a legal regime that prioritized the unimpeded flow of global commerce.
Under the United Nations Convention on the Law of the Sea (UNCLOS), all vessels enjoyed the right of transit passage. This allowed ships to navigate through the territorial waters of Iran and Oman without needing authorization.
Commercial tankers and military vessels passed through the strait without paying tolls, taxes, or transit fees. International law explicitly forbade coastal states from demanding payment for permission to pass. Shipping was guided by the Traffic Separation Scheme, which maintained wide inbound and outbound lanes separated by a buffer zone to prevent collisions in the 33-km-wide waterway.
Before the war's disruption, the Strait handled approximately 21 million barrels of oil per day, representing 20–30% of global seaborne oil trade and 90% of the strait’s oil flows to Asian markets. Daily traffic typically ranged from 80 to 130 ships, including Gulf states and tankers.
While the waters fall entirely within the territorial seas of Iran and Oman, their domestic regulations — such as those requiring military vessels to seek authorization — were not enforced during peacetime to maintain global economic stability.
10-point plan
The proposed Iranian 10-point plan represents a fundamental shift away from this established international framework, moving toward a model of selective, state-controlled access and mandatory financial levies that would significantly expand Iranian authority over the waterway. The proposal includes the following points:
Formal recognition of Iran’s continued and expanding control over the Strait of Hormuz
All passage through the strait would be "controlled transit" or "regulated passage," coordinated specifically with the Iranian Armed Forces
Iran shall collect a NT$63.5 million (US$2 million) transit tax on every ship transiting the strait
Fees may be shared with Oman, which sits across the waterway
Transit revenue fees would be dedicated to Iranian infrastructure reconstruction rather than war reparations
A new "secure transit protocol" for safe passage through the waterway would come into being, only if Iran’s conditions are met.
The Iranian plan sets a dangerous precedent by replacing freedom of navigation protocols with state-managed control. The Houthis could adopt a similar strategy for the Red Sea’s Bab al-Mandeb. This kind of maritime chokepoint pressure strategy provides a blueprint for China to institutionalize similar dominance over the Taiwan Strait.
International vs internal
Iran’s plan asserts that the Strait of Hormuz is a zone of controlled passage under the absolute authority of a coastal state and not an international waterway. Similarly, China has argued that the Taiwan Strait is not "international waters” but rather “internal waters.”
Iran’s proposal to charge a transit fee per vessel represents a fundamental break from the UNCLOS, which forbids taxing ships for simple passage. This sets a precedent where a dominant regional power can "tax" global trade, a tactic China could replicate to financially penalize vessels or nations that do not recognize its sovereignty over Taiwan.
This new precedent would be especially detrimental to Japan, South Korea, and Taiwan because they rely heavily on the strait for their economic survival. Japan moves 95% of its crude oil and a third of its total trade through the passage, while South Korea depends on it for 65% of its oil.
Taiwan is the most vulnerable, with 100% of its seaborne trade and crude oil tied to the waterway. While Japan and South Korea could reroute through the Luzon Strait at an extreme cost, Taiwan has no such alternative.
By banning US and Israeli vessels while allowing others to pass for a fee, Iran is moving toward selective maritime access. China could use this as a model to vet traffic in the Taiwan Strait, effectively blockading specific nations for leverage while maintaining enough trade flow to prevent a total global economic collapse.
Test case
RAND Corporation analysts and others note that US acceptance of Iran’s vetting system or tolls to avoid further military escalation signals a retreat from its role as the guarantor of global shipping lanes.
China and Russia’s vetoes of UN resolutions aimed at reopening the strait suggest a coordinated effort to support chokepoint warfare. This alignment implies that Beijing sees strategic value in Iran’s tactics and views them as a test case for how the West responds to the weaponization of maritime geography.
To counter a potential CCP chokepoint strategy, Taiwan could cede the Penghu Islands to the US, utilizing a "Sovereign Base Area" model like the British bases in Cyprus. The argument for immediate action is to preempt the PLA’s projected 2027 military overmatch, mirroring the logic of the US strikes on Iran: neutralizing a threat before it can establish an impenetrable defensive shield.
By acting now, Taiwan would secure a permanent US presence while Washington still holds regional dominance.
This maneuver would specifically preempt the chokepoint warfare recently seen in the Strait of Hormuz. Legally, a US sovereign presence in Penghu would cement the Taiwan Strait as an international waterway, preventing Beijing from unilaterally reclassifying it as "internal waters."
By replacing strategic ambiguity with a permanent sovereign deterrent, the move forces China to recognize that any future blockade or assault would constitute a direct attack on US soil.
