Iran plans to offer insurance for Hormuz transit: Will it work?

"Tehran is reportedly proposing Bitcoin-based ship insurance for the Strait of Hormuz, a move likely to raise global maritime concerns. Iran has moved a step further in its attempts to formalise its effective control over the Strait of Hormuz after the country's top security organ announced the formation of a new body to manage the key passage. The country's Supreme National Security Council on Monday said the new authority, called the Persian Gulf Strait Authority (PGSA), would provide real-time updates on operations and the latest developments in the strait, a critical chokepoint through which 20 percent of the world's oil and gas pass in peacetime."

"The announcement comes two days after reports surfaced that Iran was planning to provide insurance to ships crossing the Strait of Hormuz. According to a report by Iran's semi-official Fars news agency published on Saturday, Tehran will offer insurance for vessels transiting the strait and surrounding Gulf waters, with payments settled in cryptocurrency. Since the US-Israel war on Iran began on February 28, Iranian officials and lawmakers have repeatedly floated the idea of imposing transit charges or security fees on ships using the Strait of Hormuz. Tehran has already admitted receiving tolls from ships attempting to make their way through the key waterway."

"Iran has effectively closed the strait in retaliation for US-Israeli attacks, causing disruptions to global energy markets and fuel prices to soar, as oil tankers are largely unable to pass through. Globally, the idea of ships having to pay any fee to pass through the strait has been universally rejected. The US Department of State said this month that international waterways must remain open to global shipping and that no country should impose unilateral tolls on transit passage. China has seemingly also voiced opposition to any move restricting free navigation through the waterway."

Iran is proposing a new ship insurance approach for vessels crossing the Strait of Hormuz, with payments settled in cryptocurrency. Iran is also moving to formalize effective control over the strait by creating the Persian Gulf Strait Authority, which will provide real-time updates on operations and developments in the passage. The Strait of Hormuz is a critical chokepoint for global oil and gas, with about 20 percent of world oil and gas passing through in peacetime. Iran has previously floated transit charges or security fees and has admitted receiving tolls. Global opposition exists, with the US and China emphasizing that international waterways must remain open and that unilateral tolls should not be imposed.

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