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The American Petroleum Institute (API), the leading trade group representing the US oil and natural gas industry, has opposed any proposal to impose transit fees on vessels passing through the Strait of Hormuz, arguing that Iran should not be allowed to exert greater control over one of the world’s most critical energy shipping lanes.
Speaking to Reuters, API President and CEO Mike Sommers said the industry was unlikely to support any new tolling mechanism for ships using the strategic waterway, particularly one introduced amid heightened military tensions.
“I think it’s unlikely that we would support any kind of new tolling authority, particularly one that’s backed up by the threat of more bombing in the Strait of Hormuz,” Sommers told Reuters.
His comments came after Reuters reported that Oman has presented Iran with a proposal backed by Gulf states to help manage shipping through the Strait of Hormuz. The plan would allow Tehran to collect voluntary transit fees from vessels using the waterway, according to a Gulf source and a Western diplomat familiar with the discussions.
Oil chokepoint at the centre of tensions
The Strait of Hormuz remains one of the world’s most important maritime chokepoints, handling roughly a fifth of global oil consumption and significant volumes of liquefied natural gas exports.
Shipping through the narrow waterway has come under intense scrutiny since the United States and Israel launched military strikes on Iran in February. Tehran has since maintained a tight grip over the strait, raising fears of supply disruptions and sending global crude prices sharply higher.
Sommers said restoring normal shipping flows through the strait would be crucial to bringing stability back to oil markets but stressed that Iran should not be allowed to dictate access to the route.
“Iran must not be allowed to control the waterway,” he said, adding that increasing vessel movements through the strait would be key to normalising global energy markets.
Strategic reserves under strain
Sommers also warned that the United States and other major oil-consuming nations have been drawing crude oil and fuel from emergency stockpiles at a record pace to offset supply disruptions caused by the conflict.
He urged the US Congress to invest in modernising the Strategic Petroleum Reserve (SPR), saying the underground storage caverns were designed for rapid emergency drawdowns but have become increasingly difficult to refill and maintain.
According to Sommers, lawmakers should also consider developing new SPR storage sites along the US West Coast, an idea that had been explored by President Donald Trump’s administration before the Iran conflict escalated.
Why it matters for India
Developments in the Strait of Hormuz are being closely watched by India, which imports the bulk of its crude oil requirements from producers in West Asia, including Iraq, Saudi Arabia, the UAE and Kuwait. A significant share of these shipments passes through the strategic waterway.
Any move to introduce transit fees or any disruption to shipping through the strait could increase transportation costs, push up global crude prices and raise India’s oil import bill, potentially fuelling inflation and putting pressure on the country’s current account balance.
Oil markets have remained volatile in recent months as traders assess the risk of prolonged supply disruptions in the Gulf and their impact on global energy security.
With inputs from agencies.
