US Oil Lobby Rejects Proposed Tolls for Strait of Hormuz Transit

The American Petroleum Institute (API), the leading U.S. oil and gas trade association, announced its opposition to any form of tolls or transit fees for vessels navigating the critical Strait of Hormuz. The statement follows reports of a Gulf-backed diplomatic proposal that would involve Iran collecting voluntary payments from ships using the waterway.

API Cites Security Concerns

In a Tuesday interview with Reuters, API Chief Executive Mike Sommers expressed strong reservations about the plan. "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 said.

Sommers emphasized that while increasing vessel traffic through the strait is crucial for stabilizing global oil markets, Iran must not be allowed to control the strategic chokepoint. The strait has been a flashpoint since February, when Iran reportedly tightened its grip on the passage, contributing to a surge in oil prices.

Context of the Proposal

According to a Reuters report citing a Gulf source and a Western diplomat, Oman presented Iran with a plan supported by other Gulf states. The proposal suggests a framework for managing the strait that includes Tehran collecting voluntary fees from transiting vessels.

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This diplomatic effort comes as the U.S. and other major oil-consuming nations have been drawing down their crude and fuel inventories at a record pace to offset market disruptions. The Strait of Hormuz is a vital artery for global energy supplies, with a significant portion of the world's seaborne oil passing through it daily.

Call to Bolster US Reserves

Beyond the immediate issue of Hormuz, Sommers urged the U.S. Congress to address domestic energy security by upgrading the country's Strategic Petroleum Reserve (SPR). He noted that the SPR's existing caverns were designed for rapid drawdowns but are difficult to refill and maintain.

Sommers also suggested that Congress should consider proposals to establish new SPR sites along the U.S. West Coast. This idea was previously explored by the Trump administration before the recent escalation of conflict with Iran, according to the API chief.