Middle East
Iran imposes ‘transit fees’ on Strait of Hormuz shipping payable in yuan and crypto
The operator of an oil tanker stranded in the Persian Gulf recently received an enticing offer. As missiles and drones streaked overhead, the vessel—which had been at anchor for weeks—was promised a safe escort through the Strait of Hormuz by the Iranian Navy.
However, according to a company executive, there was a condition: the ship had to fly the Pakistani flag.
The company ultimately declined the proposal. While Iran had agreed to allow 20 Pakistani vessels to transit the strait, Islamabad possessed very few ships flying its national colors in the Gulf. Sources familiar with the matter said Islamabad subsequently approached some of the world’s largest commodity traders to see if they had vessels that could temporarily re-register under the Pakistani flag.
One source told Bloomberg that Pakistan sought the largest ships available, including supertankers capable of carrying 2 million barrels of oil. Arranging these transits was seen as a way to demonstrate the success of diplomatic efforts to de-escalate regional conflict. At least two major oil trading firms received the proposal.
The arrangement underscores the significant control the Islamic Revolutionary Guard Corps (IRGC) exerts over maritime traffic in the Strait of Hormuz, a chokepoint for 20% of the world’s petroleum and liquefied natural gas. Shipping industry insiders and government officials with direct knowledge of the negotiations said the IRGC is now charging transit fees, granting preferential treatment to ships from nations it deems friendly while threatening those from perceived “hostile” states.
The semi-official Fars News Agency, citing a committee member, reported that the Iranian National Security Committee has approved a bill to implement fees in the Strait of Hormuz.
Under the new system, ship operators must contact an intermediary linked to the IRGC. They are required to provide comprehensive data, including ownership, flag, cargo manifest, destination, crew list, and Automatic Identification System (AIS) transponder data.
The intermediary forwards this file to the IRGC Navy’s Hormuzgan Provincial Command for a background check. This process ensures the vessel has no ties to Israel, the US, or other states Iran considers adversaries.
If a ship meets these criteria, negotiations over the “toll” begin. Sources indicated that Iran uses a five-tier ranking system for nations; vessels from “friendly” countries are more likely to secure favorable terms. For oil tankers, the starting price is typically around $1 per barrel, payable in yuan or stablecoins. For a Very Large Crude Carrier (VLCC) with a 2-million-barrel capacity, this represents a significant outlay.
Once the fee is paid, Iran provides a permit code and routing instructions. Vessels are expected to fly the flag of the negotiating country and, in some instances, formally switch their registry. Upon approaching the strait, the ship broadcasts its code over VHF radio and is met by a patrol boat that escorts it through a coastal route between an island group known in the industry as the “Iranian Tollbooth.”
Ship tracking data shows that while traffic through the strait increased slightly last week, it remains well below pre-conflict levels.
The legal basis for Iran’s fee implementation remains unclear. Under international law, nations have sovereign rights over territorial waters extending 12 nautical miles from their coast, but the right of “transit passage” through international straits is generally protected. In a recent letter to the International Maritime Organization (IMO), Iran stated that non-hostile vessels could safely navigate the strait, though it confirmed restrictions on hostile ships.
“As a coastal state, the Islamic Republic of Iran has restricted the passage of vessels belonging to or linked to aggressors, in full compliance with established principles of international law,” the letter stated.
Legal experts dispute this interpretation. Jason Chuah, professor of maritime and commercial law at City University London, said Iran’s justification is framed as a right to self-defense. “From the perspective of most international law commentators, this is not legal,” Chuah said.
Ship owners and operators now face complex legal questions regarding the payment of these fees, including how they align with US and Iranian sanctions and what their insurance policies cover. Insurance costs for vessels entering the Strait of Hormuz have surged, particularly after several ships were struck by projectiles while at anchor.
Beyond physical risks, experts warned that engaging with the IRGC—which is subject to sanctions by the US, the European Union, and the UK—could expose companies to prosecution for violating anti-money laundering regulations or sanctions regimes.
Middle East
US waives human rights terms on $320m military aid to Egypt
The US State Department stated that it has waived human rights conditions on more than $300 million in military aid to Egypt.
The statement emphasised that this decision was taken in consideration of Cairo’s “helpful role” since the outbreak of the war against Iran.
Egypt began receiving substantial support from the US after signing a peace treaty with Israel in 1979.
Since the late 1980s, the country has received approximately $1.3 billion annually in US military assistance.
A portion of this aid is subject to conditions related to human rights and democracy, which can be waived on national security grounds.
Withholding funds, including during the administration of former US President Joe Biden, has caused tension between Cairo and Washington in the past.
A letter dated 21 September and addressed to various congressional committees, obtained by Reuters, stated that Secretary of State Marco Rubio “decided to waive the certification requirement under the fiscal year 2025 Foreign Military Financing programme for Egypt of $320 million.”
This waiver was subsequently confirmed by the State Department.
An accompanying memorandum justifying the decision stated that this portion of military aid was “essential for counterterrorism, border security, or non-proliferation programmes, or otherwise important to the national security interests of the United States.”
The memorandum, dated 4 September and bearing Rubio’s signature, stated: “Exercising this waiver authority is critical to the US-Egypt relationship and to US national security priorities, particularly given the helpful role Egypt has played in the aftermath of Operation Epic Fury.”
“Operation Epic Fury” is the designation used by the US military for the campaign launched jointly with Israel against Iran in late February.
The State Department memorandum, whose authenticity was confirmed by two sources in Washington familiar with the letter, did not provide detailed information regarding what was termed Egypt’s “helpful role”.
The State Department’s annual decision on military aid to Egypt typically covers funds allocated for the preceding fiscal year, which ends on 30 September.
A State Department spokesperson stated that Rubio waived the certification in the interest of US national security and that the US continues to cooperate with the Egyptian government across a range of issues.
In an emailed statement, the spokesperson said: “This waiver recognizes the importance of maintaining security cooperation with Egypt at a time of significant security challenges in the region.”
The Egyptian Ministry of Foreign Affairs did not immediately comment on the matter.
The spillover effects of the Iran war have imposed a heavy toll on US security partners, including Egypt.
Owing to rising fuel prices and other disruptions, the Egyptian economy is passing through a difficult period.
Under the Biden administration, the US withheld portions of the annual military allocation on multiple occasions over Egypt’s human rights record.
In 2024, following the Hamas-led 7 October attack on Israel and the subsequent war in Gaza, the Biden administration set aside human rights conditions, disbursing the entire $1.3 billion allocation to Egypt for the first time in its tenure.
Human rights organisations have long accused Egypt, under the administration of President Abdel Fattah al-Sisi, of widespread human rights abuses, including torture and enforced disappearances.
This week, Egyptian police detained six journalists from a fact-checking and investigative media outlet, accusing them of spreading false information on behalf of the banned Muslim Brotherhood.
Egyptian authorities state that they have taken steps to address human rights issues. Sisi said stability is paramount and that the government supports human rights by working to provide for basic needs.
Middle East
Britain expands curbs on arms exports to Israel over Gaza risks
Britain has significantly broadened its military export restrictions targeting Israel, suspending or rejecting more than 80 licences for items the IDF could use in Gaza.
This figure is nearly triple the number affected when the policy was first introduced in September 2024.
United Kingdom Minister of State for the Middle East Stephen Doughty said that as part of what he described as a “tighter system” for assessing exports to Israel, more than 50 further export applications have been refused since approximately 30 licences were initially suspended.
Under the initial decision taken in September 2024, 30 of roughly 350 licences were suspended after the British government concluded there was a “clear risk” that certain military exports could be used to commit or facilitate serious violations of international humanitarian law in Gaza.
The affected equipment included components for military aircraft, drones, naval systems, and targeting gear.
Doughty said additional measures adopted this month established what he termed a “double safeguard” mechanism within the approvals process.
Export applications must now be assessed both against existing international humanitarian law criteria and in light of Britain’s position on the legality of Israel’s presence in the Palestinian territories.
“We have so far suspended or refused more than 80 licences,” Doughty said, adding that he had personally examined each licence.
Despite the wider restrictions, British-origin parts entering the international F-35 fighter jet supply chain continue to be largely exempt.
The UK government argues that preventing British-made components from entering the global F-35 pool could undermine the programme as a whole and have serious consequences for the security of the UK and its allies.
Direct exports of F-35 parts intended specifically for Israel remain suspended.
Doughty defended maintaining the supply of components via the international programme, arguing that halting it could have severe ramifications for the broader European and allied security architecture.
Foreign Affairs Committee Chair Emily Thornberry challenged this position, arguing that the issue was political rather than purely legal.
Thornberry suggested adopting an approach similar to the Dutch model, under which components entering the international supply chain could be flagged as “not intended for aircraft bound for Israel”.
The initial suspension was implemented in September 2024 by then Foreign Secretary David Lammy.
Lammy stressed at the time that the measure did not constitute an arms embargo and applied solely to items assessed as usable in military operations in Gaza.
Since then, the policy has been tightened further under Prime Minister Andy Burnham.
The expanded export restrictions follow the Burnham government’s adoption of a more confrontational policy toward the Israeli government.
Foreign Secretary Ed Miliband drew sustained applause at the Labour Party’s annual conference in Liverpool after delivering a sharp critique of the Netanyahu government’s policies and defending the decision to ban trade with Israeli settlements in the West Bank.
Accusing Israel of committing war crimes in Gaza, Miliband stated that the British government heard public outrage over the conflict, telling delegates: “We hear you. You were right.”
Middle East
Netanyahu holds secret UAE talks with Saudi Arabia and Arab officials
Israeli Prime Minister Benjamin Netanyahu met with representatives of Gulf and Arab nations that lack diplomatic ties with Israel, including Saudi Arabia, during his weekend visit to the United Arab Emirates.
Sources close to the gathering told the Israeli newspaper Yedioth Ahronoth on Monday that representatives from Morocco, Libya, Jordan, and Qatar also took part in the meeting.
Netanyahu made a unannounced visit to Abu Dhabi on Sunday, where he met with the country’s leader, Mohammed bin Zayed Al Nahyan.
According to Israeli media, this marked the first time the United Arab Emirates officially confirmed a visit by Netanyahu.
The meeting was arranged by Mossad Director Roman Goffman “at the request of Saudi Arabia, which asked for Israel’s assistance against Houthi attacks in the Red Sea region,” according to Yedioth Ahronoth.
The discussions addressed Iran and the Houthi militia. The newspaper added that the Arab states heard from Israel that “Israel is prepared to assist countries in the region with air defence systems, just as it aided the UAE during the conflict with Iran.”
Conflict in Yemen intensified in September when Ansarullah militiamen launched a rapid offensive that seized Yemen’s entire Red Sea coastline, including the vital maritime corridor of the Bab el-Mandeb Strait.
The Yemeni resistance also imposed a blockade on Saudi Arabia’s energy exports and staged multiple attacks against the kingdom.
Saudi Arabia reportedly sought military assistance from the US to counter Ansarullah.
Washington declined to attack the Houthis directly, but announced that it would provide intelligence and targeting support.
Reporting on the same visit, The Jerusalem Post said Netanyahu spent six hours in the UAE and that the principal subject of his discussions with MBZ was Iran.
Citing sources familiar with the matter, the newspaper added that the trip came “after Netanyahu exerted heavy pressure on the United Arab Emirates to arrange a meeting ahead of the Israeli elections on 27 October.”
Separately, the Associated Press, citing a person with direct knowledge of the meeting, reported that Netanyahu’s visit to the UAE was arranged in part to ask MBZ to deny reports that he had warned the Israeli prime minister of an impending Hamas threat prior to 7 October 2023.
According to Israeli media, Netanyahu’s office denied the AP report, issuing the following statement:
“Fake news. The visit focused solely on strengthening ties between the two countries and on regional issues.”
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