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(Bloomberg) — Shipping executives at two of the world’s biggest commodity traders said they’re concerned Iranian tolls on the Strait of Hormuz set a dangerous precedent for the free flow of global trade.
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Iran has sought to charge some vessels for safe passage through the waterway since the Middle East war began at the end of February, sparking outcry from the world’s shipping watchdog. Tehran drafted laws to govern transit, including the collection of fees, the semi-official Fars news agency reported last month.
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“There’s really a dangerous precedent that’s getting created here which undermines the right of innocent passage,” Larry Johnson, global head of freight at Mercuria Energy Trading, said at the FT Commodities Global Summit in Lausanne, Switzerland.
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“If chokepoints or waterways start getting tolled or feed or threatened and it becomes a precedent that one will allow such fees to be collected, then what’s next? The Black Sea, the Danish Straits, Malacca, who knows?” he said. “Now we don’t anymore have a free flow of global trade.”
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Singapore’s foreign minister said this week that passage through the straits of Malacca and Singapore must remain free for all and that the city-state won’t support any efforts to restrict it. He added that he had conveyed that message to Washington and Beijing. The trade route has long been identified by China’s leaders as a vulnerability in a war scenario.
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Concern about the emergence of a wider pattern of tolling waterways was also echoed by the shipping arm of commodity trader Gunvor Group.
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“Essentially you’re getting ransomed to pass the point,” said Andrew Jamieson, co-head of shipping at Gunvor’s Clearlake Shipping. “Wherever there is market structure or a chokepoint, you’re just going to have the incentive to do that going forward, which is worrying.”
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