Selective transit control by Iran in the Strait of Hormuz
Iran appears to be moving toward a "selective blockade" of the Strait of Hormuz in recent days, permitting only vessels from specific nations to navigate this strategic maritime corridor. According to Lloyd’s List, several countries—including India, Pakistan, Iraq, Malaysia, and China—are in direct negotiations with Tehran to secure passage for their ships through Iranian territorial waters within the Strait.
New monitoring and registration system by the Revolutionary Guards
A new ship tracking and registration system is currently being developed by the Revolutionary Guards (IRGC), according to the same source. As of Wednesday, at least nine vessels had already utilized a corridor passing near Iran’s Larak Island, while one tanker reportedly paid approximately $2 million to secure its right of passage.
Security and insurance concerns
International trade and maritime law expert Alex Mills told Al Jazeera that while the new registration system may offer a short-term fix, it could face significant hurdles from the insurance industry. "The Iranian proposal to allow passage for ships that move through Iranian waters, call at Iranian ports, and declare all cargo destinations is interesting. However, it contradicts the established practice of 'going dark' when entering Iranian waters and creates additional security risks for vessels while the conflict remains active," he noted.
Uncertainty over plan viability
Mills expressed reservations about whether this system can function in practice, pointing out that issues regarding insurance coverage, operational safety, and existing sanctions may deter its use. However, as she noted, as the conflict persists, it may become a risk worth taking for certain companies and vessels.
Trump seeks "tolls" of his own
The US is also considering the imposition of "tolls" in the Strait of Hormuz, with a plan that is significantly more ambitious than that of Iran, which currently controls the gateway. According to Financial Times reports, the Trump administration has examined plans that would require ships escorted by the US Navy through the Hormuz to purchase insurance from the American government. The American president stated that the US would insure commercial ships seeking to transit the strategic waterway, as the threat of closure has forced vessels to remain stationary in the Gulf.
The International Development Finance Corporation (DFC), the government's international investment arm, presented a plan earlier this month to provide up to $20 billion in reinsurance to support ships through the straits, paired with naval escorts. Since then, the administration has been weighing whether to require ships seeking a navy escort to purchase insurance under a program managed by the DFC alongside Chubb, a private insurer, rather than buying commercial insurance from the private market. It remains unclear if the Trump administration will proceed with the mandatory component of the program, which senior industry executives believe could yield tens of millions in profits, provided the ships are not attacked by Iran.
The model and the challenges
Under the discussed model, ships requesting American military escort through the Strait of Hormuz would be obliged to purchase US government insurance for the vessel, machinery, and cargo, according to insurance market participants in direct contact with the DFC. However, there is significant uncertainty regarding whether the naval protection promised by Trump will actually become available. Two sources added that coverage was not expected to be available for at least another week. The US Navy is attempting to determine how it could provide escorts without endangering its own ships, which would be vulnerable to Iranian attacks from drones, missiles, and explosive-laden speedboats.
Deliberations and risks
A DFC-backed insurance facility in Ukraine, created to support private sector investment in the war-torn country, has been "very profitable" for the agency, having faced only one claim in the past year. However, insurance executives are unsure if oil tankers and other vessels will sail through Hormuz under the protection of a US naval convoy, should one eventually be organized. "I don't know if a naval escort will act as a deterrent or an 'attractive nuisance' for Iran," stated a brokerage executive. The DFC announced that its insurance plan would "protect ships transiting the Strait while under US military escort, if and when such escorts begin." The US Department of Defense and Central Command (CENTCOM), which oversees military operations in the Middle East, refused to comment on whether the US Navy would provide escorts only to vessels that have secured DFC insurance coverage.
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