Kaja Kallas, the EU's foreign policy chief, has called on Iran to drop plans for transit fees in the Strait of Hormuz. Kallas stressed that the strategic sea lane must remain open and free of charges. Her statement came after Iran's parliament prepared a draft bill to impose fees on passages through the strait.
The Strait of Hormuz is a critical choke point through which roughly 20 per cent of world oil supply flows. The narrow corridor between Iran and Oman links the Persian Gulf to the Gulf of Oman. Daily 17-20 million barrels of oil and millions of tons of gas/chemical cargoes pass through this route. Transit fees could generate a serious cost increase for the global energy market.
Kallas's statement invokes the right of innocent passage in international straits under the UN Convention on the Law of the Sea (UNCLOS). Iran has raised the fee demand as a retaliation tool amid the Gaza war and Western sanctions. As the US increases economic pressure on Iran, European leaders highlight keeping the strait open for commercial ships as a critical condition. A chaos scenario could drive oil prices into the $120-150 band and create a domino effect on global supply chains.
Key Takeaways:
1. EU foreign policy chief Kaja Kallas urged Iran to drop plans for Hormuz transit fees.
2. The Strait of Hormuz is a critical point through which about 20% of world oil supply flows.
3. 17-20 million barrels of oil pass through this route daily.
4. The UN Convention on the Law of the Sea (UNCLOS) safeguards innocent passage through international straits.
5. A chaos scenario could push oil prices into the $120-150 band.
