Iran is seeking to tighten its grip on the Strait of Hormuz — not by closing it, but by reopening it on its own terms and forcing countries to pay for passage.
Multiple reports — first from the maritime news outlet Lloyd’s List, then Bloomberg — now confirm that the colloquially named “Tehran Toll Booth” is open for business. How it works is simple: Iran offers passage through its territorial waters in the strait in exchange for payment as high as $2 million. It’s a shakedown, and tankers are happy to pay.
Traffic through the Tehran Toll Booth is growing steadily, with at least 20 ships transiting the corridor as of March 23. It accounts for anywhere between 10% and 20% of all traffic through the strait since the start of the war — and the Iranian parliament is now moving to formalize its operations with permanent taxes and fees. What’s more, the impact of Iran’s effective control over this corridor is only exacerbated by the United States’s decision earlier this month to issue what now serves as an effectively condition-free, monthlong authorization for the sale of sanctioned Iranian oil.
The governments of India, Pakistan, Iraq, Malaysia, and China have all reportedly begun discussions with Iran over securing access to the corridor. Ships destined for India and China have already made their way through. Meanwhile, CNN reported earlier this month that Iran may authorize tankers to pass through the strait, provided their oil cargo is traded in Chinese yuan.
President Donald Trump should take decisive action now — targeting the corridor’s military and financial support infrastructure — to strike at Iran’s control over the strait and deprive the regime of new, desperately needed funds.
The first step in dismantling the corridor involves targeting Larak Island, which the Islamic Revolutionary Guard Corps is reportedly using to monitor vessels transiting the “safe” route. The island sits just 20 miles from mainland Iran and has not been hit by either U.S. or Israeli airstrikes. According to the Israel-based Alma Research and Education Center, the island houses a Russian-made satellite communications jamming system under Iran’s layered air defense networks, along with Iranian naval infantry and fast-attack vessels armed with anti-ship missiles. Striking these facilities would eliminate Iran’s ability to validate which vessels are cleared for transit — and with it, the corridor’s operational backbone.
The second step is financial. Washington should aggressively sanction Chinese businesses and financial institutions that have historically facilitated Iranian sanctions evasion — and that are well positioned to process any yuan-denominated payments linked to the corridor’s operation. These firms and the schemes they operate have been detailed at length by the press and research institutions.
The Treasury Department should impose sanctions on the Chinese financial intermediaries most likely servicing Iran’s accounts, sending a clear signal that there are consequences for helping to solidify the regime’s control over the strait. The Trump administration has thus far shown little appetite for such coercive action directed at Beijing. Iran’s effective closure of the Strait of Hormuz may shift that strategic thinking.
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Washington should also consider broader coercive options. Richard Haass has proposed an “Open for All or Closed to All” policy, which would establish a defensive line across the Gulf of Oman to prevent Iranian vessels from reaching their final destinations until Tehran unconditionally reopens the strait. The approach would force the countries buying Iranian oil — China, India, Pakistan, and Turkey — to pressure Iran directly. It is worth serious consideration.
Iran’s “safe” corridor is a protection racket. The U.S. has the military assets, sanctions authorities, and diplomatic leverage to shut it down. What it needs is the will to act before Iran’s control over the strait becomes the status quo.
Max Meizlish is a research fellow at the Foundation for Defense of Democracies and a former sanctions enforcement officer in the U.S. Treasury’s Office of Foreign Assets Control. Follow him on X @maxmeizlish.
