How Iran is Going to Kill the Pax Americana

TL;DR

Iran's demand to establish a permanent toll booth on the Strait of Hormuz could cascade into a global return to mercantilist trade barriers, ending the US-guaranteed free navigation order.

Key Points

• 1.Iran's core demand is sovereign control over the Strait of Hormuz. Among irreconcilable demands including nuclear enrichment rights, US troop withdrawal, and sanctions relief, Iran's toll booth demand is the most consequential for the world order.
• 2.Iran's improvised wartime toll system has already gained real-world acceptance. Countries including China, Japan, India, Pakistan, Greece, Malaysia, and Egypt began paying Iran fees — typically in cryptocurrency, stablecoins, or Chinese yuan — while the US military proved unable to stop them.
• 3.Iran is demanding $2 million per vessel, roughly $1 per barrel of oil transiting Hormuz. A Brussels-based think tank, Bgal, calculated this would raise global oil prices only 5–40 cents per barrel, with Gulf Arab states absorbing over 80% of the cost — between $6–14 billion annually.
• 4.Hormuz control would make Iran the dominant global oil swing producer overnight. Saudi Arabia currently controls 50–60% of global spare oil capacity and acts as the world's central oil bank; Iran could replace it by simply adjusting tanker flow through the strait.
• 5.The Strait's closure is financially fueling Russia's war in Ukraine. Bgal estimates surging oil prices from the closure could give the Kremlin $45–151 billion in extra revenue depending on duration, creating a perverse US incentive to accept the Iranian toll as the lesser evil.
• 6.The toll would violate decades of international maritime law but has historical precedents. Denmark enforced the Sound Dues from the 15th through mid-19th century, earning up to two-thirds of its national income; Byzantines, Ottomans, Portuguese, and Dutch East India Company all similarly taxed maritime choke points.
• 7.The US built the Pax Americana on free navigation enforced by its navy since 1945. From fighting Barbary pirates to freedom-of-navigation ops against Libya, Somalia, China, and the Houthis, America has consistently defended toll-free international straits as a core doctrine since the republic's founding.
• 8.Accepting Iran's toll could trigger a cascading global return to mercantilist trade barriers. Denmark could reimpose Sound Dues on Russian Baltic oil exports, Turkey could renegotiate the Montreux Convention, and choke points from Malacca to Gibraltar to the Northwest Passage could all become toll routes, fragmenting globalization.