Iran Is Not Blocking the Strait of Hormuz. It's Running a Toll Booth

Summary

On March 26, Abbas Araghchi announced that ships from five "friendly nations" could transit the Strait of Hormuz: China, Russia, India, Iraq, Pakistan. Since then, the list has quietly expanded to include Turkey, Malaysia, Thailand, the Philippines, France (one CMA CGM vessel), Japan (one Mitsui OSK LNG tanker), and Oman. Ships from the United States and Israel are permanently barred. Countries that imposed unilateral sanctions on Iran face the same prohibition. Gulf Arab states involved in the conflict are implicitly excluded. This is not a blockade. It is a permission economy. And it is the most consequential geopolitical innovation of a war now in its sixth week. The mechanics are documented by the Atlantic Council, CNBC, and Bloomberg. Ship operators contact IRGC-linked intermediaries and submit IMO numbers, crew lists, cargo manifests, ownership structures, and final destinations. The IRGC vets the information against what Iran reportedly calls a "friendliness ranking," a 1-to-5 scoring system for each nation. If approved, the IRGC issues a single-use VHF passcode and route instructions. Ships are directed through Iranian territorial waters north of Larak Island, not the main shipping channel south of it. An Iranian patrol boat arrives to escort the vessel through. Payment is approximately $1 per barrel, roughly $2 million for a fully loaded VLCC. Payment is accepted in Chinese yuan via Kunlun Bank, which handles Iran-China transactions outside SWIFT, or in stablecoins and cryptocurrency. Sixty-two vessels have transited through this corridor since March 13, according to Lloyd's List Intelligence. Total transits since March 1: 221 ships, of which 145 were traceable and 76 had their AIS transponders turned off. Seventy-one percent of all ships that transited are Iranian-owned, going to or from Iranian ports, or part of the shadow fleet linked to Iranian oil. The system works. Not well. Not at pre-war volumes. But it works.Who Is Actually Getting Through China wa...