Iran has taken significant steps to enhance its control over the strategic Strait of Hormuz, a vital maritime passageway for global oil and gas shipments. The Supreme National Security Council of Iran has announced the creation of the Persian Gulf Strait Authority (PGSA), which aims to provide real-time updates and manage operations in the strait, through which approximately 20 percent of the world’s energy supply is transported during times of peace.
The announcement follows reports indicating that Iran plans to offer insurance coverage to vessels navigating the Strait of Hormuz. According to Fars News Agency, a semi-official Iranian news outlet, the Hormuz Safe website is set to commence offering various maritime insurance products, using cryptocurrencies such as Bitcoin for payment. This initiative is expected to generate over $10 billion in annual revenue for Iran, providing coverage from the moment of confirmation with a signed receipt issued to the cargo owner.
Tehran has suggested that these insurance fees are necessary for repairing damage resulting from ongoing U.S.-Israeli military actions, which have previously prompted Iran to disrupt naval traffic through the strait. The country has indicated it reserves the right to impose transit fees on ships traversing the waterway, with officials admitting to having received fees from vessels attempting to pass.
However, the idea of imposing tolls on ships has met with broad international disapproval. The U.S. Department of State has emphasized that global shipping must remain unimpeded and has rejected any notion of individual countries levying charges on international waterways. China has similarly expressed opposition to any limits on navigation through the strait.
While Iran is positioning its insurance offer as a commercial service, many shipping companies may perceive it as just another form of toll. Reports have indicated that Iranian officials began collecting informal transit fees soon after conflict escalated on February 28.
Legal experts have highlighted significant challenges for Iran in implementing this insurance scheme. According to maritime academic Abdul Khalique, sanctions have severely constrained Iran’s access to international insurance markets and reinsurance, raising doubts about whether claims following accidents or seizures would be honored. The use of cryptocurrencies poses additional hurdles, with concerns regarding their association with sanctions evasion and potential cybersecurity threats.
In the backdrop of rising geopolitical tensions, U.S. naval blockades have further complicated Iran’s ability to guarantee safe passage to insured vessels, creating uncertainties for shipping companies that may consider operating under the proposed insurance scheme.
Since the onset of the conflict, traditional maritime insurers have significantly increased war-risk premiums for vessels entering the Gulf region, and many have ceased coverage altogether. Insurance firms that have re-entered the market typically do so under government-backed programs. Despite this, many shipping operators remain hesitant to traverse Gulf routes due to safety concerns.
To date, no countries or shipping companies have formally responded to Iran’s insurance proposal. The international community remains watchful, with prominent global powers affirming that tolls should not be imposed for maritime passage.
Experts predict that if Iran’s insurance offer were to be accepted, it would likely draw interest from only a small number of countries that have their own reservations about Western sanctions. In contrast, the majority of maritime industries may continue to rely on established international insurers affiliated with major financial hubs. Consequently, Iran’s move to formalize control over the Strait of Hormuz will likely face considerable resistance from the broader maritime community, limiting the scope and impact of its proposed insurance scheme.
