Transcription
So, there's a part of what Iran's ambassador said in Beijing that almost every headline got wrong this weekend. And I want to explain to you exactly what's really happening with that straight of Hormuz fee plan because once you understand the detail everyone skipped over, you're going to see this whole thing differently.
Quick thing before we get into it. Drop the country you're watching from in the comments. I want to know where everyone's tuning in from today. I actually do read them.
Let me take you back to Beijing this weekend. The World Peace Forum. That's where Iran's ambassador to China, Abdul Raza Rammani Fazley, stood up and dropped something that should have been a much bigger deal than it turned out to be in most of the news coverage. He said Iran is going to charge new service fees for ships going through the straight of Hormuz.
Now, the US has already said loudly and repeatedly that Iran will not be permitted to charge tolls or fees under any final agreement. Secretary of State Marco Rubio made that crystal clear. He said, "It's an international waterway. No country gets to do that." And President Trump said the same thing. called it unacceptable.
But here's what happened. The ambassador stood there in Beijing and he said, "Iran will definitely charge these service fees." And then he said something that I think is the real key to this whole thing. He said China and other friendly countries would get special consideration on these fees. Special consideration.
Now ask yourself, why would he say that part out loud? Why would you announce that you're going to give some countries a break and not others when the US is already telling you that the whole plan is a non-starter? Think about it.
Before we go any further, you need to understand what the Strait of Hormuz actually is. Because this isn't some random shipping lane. This is the most important choke point for global energy on the entire planet. Roughly a fifth of the world's crude oil and liqufied natural gas goes through that narrow stretch of water between Iran and Oman.
A fifth when Iran blockaded it during the war. And yes, there was a war, a real shooting war that started back in late February between Iran and the US and Israel. Global energy prices went absolutely insane. The strait was all but closed. Ships couldn't get through. Oil prices shot up. and the US and Israel had launched that war to destabilize Iran's leadership and take out its missile and nuclear programs. So, you have to understand how high the stakes are here.
The US and Iran reached an initial truce back in April and they signed a preliminary agreement to end hostilities. That agreement says commercial ships would transit the strait free of charge for 60 days. 60 days, which means that window is closing very, very soon.
Now, both sides are in negotiations for a permanent settlement. And one of the biggest sticking points, maybe the biggest, is who controls the straight of Hormuz and whether Iran gets to charge anything for passage. The US says absolutely not. Iran says absolutely yes. And that's where we are right now.
But here's the part that I think most people are missing. The ambassador didn't just say Iran would charge fees. He said Iran is working on this with Oman. Collaboration and cooperation with Oman. he said.
Now, Oman is interesting because Oman sits on the other side of the straight from Iran, and Oman has been a gobetween for the US and Iran for years. They're the ones who shuttle messages back and forth. They're the ones who try to keep communication lines open when the two countries aren't speaking. So, the fact that Iran says they're working with Oman on this matters because Oman has already floated a proposal to the US about voluntary shipping service fees.
Let me say that again. Voluntary shipping service fees. Oman is trying to sell this as, hey, it's not a toll, it's just a fee for services, security, supervision, environmental stuff. That's the language the Iranian ambassador used too. Service fees, not tolls. But US officials aren't buying the semantics. Rubio said, "You can call it a toll, you can call it a fee, whatever you want to call it. It's a game of semantics. That will never be an acceptable condition of any deal."
Now, I want to point out the detail that made me lean into the screen when I first read this report. The ambassador said something really specific. He said these new arrangements would be about guaranteeing the security of passage through the strait, supervision of the vessels, and dealing with the environmental consequences of the massive number of ships going through. He's wrapping this up in a package that sounds reasonable. safety, the environment, security. That's the argument.
And then he says, "We'll give special treatment to countries that were friendly to us and stood by us during the hard times." He was standing in Beijing when he said that. Think about who that message was for. China right now is Iran's biggest customer for oil. China kept buying Iranian crude even when the US had sanctions on Thran. China stood by Iran during the war in ways that the US definitely noticed. And so the ambassador is sending a very clear signal. If you're on our side, you get a pass. You get special treatment. You don't pay what everyone else pays.
And the flip side of that message is just as important. What happens to US ships? What happens to Israeli ships? What happens to ships from countries that supported the US in the war? They're not getting special treatment. They're getting the full fee. And that's a kind of economic warfare that doesn't require a single shot being fired.
Now, I want to ask you a question, and I want you to really think about it. If Iran can charge different fees to different countries based on how friendly they are, doesn't that mean Iran gets to decide who has preferential access to one of the most important shipping lanes in the world? And doesn't that mean Iran gets to punish its enemies economically without ever firing a missile? Because that's what's on the table here.
Let me take you deeper into what's actually happening behind the scenes because I think the public statements are only half the picture. Oman has been quietly working on this proposal for a while. According to some reports, they've even put together a formal plan modeled on something similar in the straits of Malaa and Singapore. In that arrangement, a private foundation collects voluntary contributions for safe navigation. It's not a toll, it's a contribution. Voluntary.
But Iran's officials have already said the payments would be obligatory. So, right away you've got a disagreement between Iran and Oman on how this would actually work. And here's where it gets really messy. Oman has said charging transit fees would be illegal. That's their foreign minister's position. But they've also said there's a difference between a transit fee and a fee for services provided by the countries along the straight. So they're trying to split a hair very finely. And the US is saying there is no hair to split. A fee is a fee is a fee. And it's not happening.
Now think about Iran's position. They argued that the straight of Hormuz is part of their territorial waters. That's a disputed claim, but they're sticking to it. And they're saying as a country where the Hormuz is part of its territorial waters, we will definitely charge service fees. They're not asking permission. They're stating a fact. From their perspective, this is happening.
But there's something else going on here. Something that I think gets to the heart of what Iran is really doing. Iran's top negotiator, Muhammad Bagger Galabaf, said something a few weeks ago that I keep coming back to. He said the Strait of Hormuz will never return to the pre-war status quo. Never. So no matter what the US says, no matter what the negotiations produce, Iran is not going back to the way things were before. They have tasted what it's like to control that choke point. They have seen what it does to global energy prices. They have experienced the leverage that comes with being able to close one of the most important shipping lanes in the world. And they're not giving that up. They're just trying to figure out how to institutionalize it in a way that the world will accept.
But the world isn't accepting it. At least the US isn't. And most of the Gulf states aren't either. Saudi Arabia's foreign minister said the strait must return to the status quo before the war. He asked, "Why should we now, as a result of a conflict, accept some novel arrangement that is going to be imposed on it?"
So, you've got Iran on one side, the US and most Gulf states on the other, and Oman trying to find some middle ground. Oman is doing what Oman always does, trying to keep the peace, trying to be the bridge, trying to avoid being crushed between the two bigger powers. But here's the problem. Oman is on the other side of that straight. They have to live with whatever arrangement is made. So, they're not going to just roll over for the US, but they're also not going to fully support Iran. They're walking a razor's edge right now.
Now, I want to talk about what this means for the negotiations. The US and Iran are supposed to be working toward a permanent peace settlement. They have a 60-day window that started when they signed that initial agreement back in June. That window is ticking down. And Iran is using the strait as leverage in those negotiations. That's what this is really about. It's a bargaining chip, a very, very powerful one.
The US has said Iran will not be allowed to charge tolls or fees under any final agreement. That's the red line. But Iran is saying we're going to do it anyway and we're going to make exceptions for our friends, which means one of two things. Either Iran is bluffing and this is a negotiation tactic to get something else or they are dead serious and they're willing to blow up the negotiations over this issue. And if they're willing to blow up the negotiations, then we're looking at a very different situation because the war could resume, the blockade could come back. global oil prices could spike again and all of the progress that was made over the past couple of months could vanish overnight.
But here's the third option, and this is the one that I think is actually the most likely based on what I'm seeing. Iran isn't bluffing about the fees, but they're also not going to force a confrontation with the US if they don't have to. What they want is a negotiated settlement that recognizes their control over the strait in some form. They want the US to acknowledge that Iran has a say in what happens there. and they're using the threat of unilateral action to force the US to the table. The special treatment for China and other friendly countries is part of that. It's a message to the US that if you don't play ball with us, we'll just cut our own deals with your allies, or at least with countries that aren't your allies. We'll let them through cheaply or for free and your ships and your allies ships will pay the price. That's a divide and conquer strategy and it's actually quite clever.
But there's another dimension to this that I want to explore with you. Iran is talking about this in the context of the war. They're saying these countries stood by us during the hard times. That's a reference to the war with the US and Israel. And China was definitely on the sidelines in a way that was favorable to Iran. They didn't actively support Iran militarily, but they continued to buy oil. They continued their economic relationship. They didn't join the sanctions. They didn't condemn Iran. From Iran's perspective, that's friendship. That's standing by them. So when the ambassador says China and other friendly countries get special treatment, he's signaling a new era in Iran's foreign policy. One where loyalty during wartime gets rewarded in peace time and where the US is not the only game in town. Iran has options. They have friends and they are building a new economic order that doesn't depend on American approval.
Now ask yourself this, how does the US respond to that? Because if Iran can just ignore what the US says and start charging fees based on political loyalty, what happens to US credibility? What happens to the message that the US is the guarantor of freedom of navigation in international waters? That's not a small thing. That's the foundation of US naval power and global influence. And that's why Rubio is so firm on this. It's not just about the money. It's about the principle. If Iran gets away with this, what's to stop other countries from doing the same thing? What's to stop Turkey from charging fees to pass through the Bosphorus? What's to stop Egypt from charging even more for the Suez Canal? That's the chaos Rubio warned about when he talked about this in Bahrain. So, the US can't back down and Iran can't back down, which means we have a real problem, a genuine conflict of interest that can't be fudged or papered over.
Let me take you to the scene of the announcement for a minute. the World Peace Forum in Beijing. That's not an accidental choice of venue. Iran's ambassador could have announced this in Thran, could have done it in a press release, could have said it in Oman, but he chose Beijing. He chose the Chinese capital. And the message was as much for the Chinese audience as it was for the world. Because China is the key here. China is the customer. China is the ally. China is the one that Iran needs to keep happy. And Iran is essentially saying to China, "We will treat you differently than the Americans treat you. We will give you a better deal. We will remember who our real friends are."
Now, China hasn't officially responded to this, not in public anyway, but you have to imagine that Chinese officials are thinking about this very carefully. On the one hand, they want free and open shipping lanes. They need oil. Their economy runs on it. On the other hand, they don't want to upset the US more than necessary, and they definitely don't want to be seen as endorsing Iran's claim of territorial waters or the right to charge fees. But China also has a long-term interest in shifting the global order away from US dominance. And anything that weakens US control over strategic choke points, that's something China is going to look at with a lot of interest. They might not say it out loud, but they're watching. They're always watching.
So let me paint you the picture that I think is forming. Iran and Oman create a new arrangement for the strait. It's service fees, not tolls. And yes, I know that's a distinction without a difference, but they're going to use that language anyway. And under this arrangement, ships from countries that are friendly to Iran get reduced fees. Maybe they're partially waved. Maybe they're deferred. Maybe they're lower than market rates. We don't know the specifics yet, but we know the special treatment is coming.
And the US gets to decide how to respond. Does it sanction countries that pay the fees? Does it use its navy to enforce freedom of navigation and contest Iran's right to charge anything? Does it walk away from the peace talks? Every option is bad. Every option risks something. And that's what I think keeps getting missed in this coverage. This isn't just about money. It's about a power shift that's happening right in front of us. Iran is taking a position and daring the US to do something about it. Iran is reshaping the rules of the game and Iran is doing it with friends who are happy to see the US back on its heels.
Now I want to go back to the beginning. the ambassador's statement, the part about friendly countries. I think that was the most important sentence of the whole announcement because it tells you everything you need to know about what Iran is actually doing. They're not trying to get a deal with the US on this. They're trying to create a new reality. A reality where the US is irrelevant. A reality where Iran controls the strait. A reality where China and other nations have a choice about which system they want to participate in. And that's a reality that the US simply cannot accept.
But what can the US do? That's the question that keeps me up at night because if you look at the military situation, Iran can make the strait very, very difficult to operate in. They have mines, they have small boats, they have missiles, they have the revolutionary guard who are not exactly known for restraint. And if the US tries to force the issue, we could be looking at an escalation that spins out of control. On the other hand, if the US does nothing, if Iran gets away with this, then the message is that the US doesn't actually enforce freedom of navigation. And that's a message that will be heard all over the world in the South China Sea, in the Taiwan Strait, everywhere that there's a choke point and a country that wants to control it. The precedent matters more than the money.
So, here's what I think is happening. I think Iran is testing the limits. I think they're seeing how far they can push before the US pushes back. And I think they're using the peace negotiations as cover to create a new normal. They can always say later, well, we were still negotiating and we were just talking about what we wanted. But everyone knows that's not how this works.
And Oman, Oman is in a really tough spot. They're caught between the US and Iran. They don't want to alienate either one. They need the US for security reasons, but they live right next to Iran. Iran is right across that narrow stretch of water. You can't relocate a country. So, Oman is trying to thread the needle. They're presenting the fee plan as something that maintains the strait's security and environmental standards. They're calling it a service fee, not a toll. And they're trying to get the US to accept it, even if reluctantly. But the US has made clear that it won't, not under any circumstances.
So what happens when Oman's proposal fails? What happens when Iran decides to go ahead without Oman's agreement? The Iranian deputy foreign minister Kazm Garib already said Thrron's priority was an agreement with Oman, but that Iran would proceed independently if needed. The message is we're doing this one way or another.
Now, I want to talk about the world reaction because I think that's the piece that tells you how big this actually is. The Gulf States are uneasy. They don't like the idea of Iran controlling the strait. They don't like the idea of Iran being able to decide who pays what. Saudi Arabia, the UAE, Qatar, they've all rejected the fee plan. They want things to go back to the way they were before the war, but they also want the peace negotiations to succeed. They don't want another war. The last one was already terrible, and they definitely don't want a confrontation with Iran that gets out of hand and draws in the US. So, they're not going to be the ones who push Iran over the edge.
And Europe, Europe wants stability. They want oil to flow. They want the strait to stay open. They don't like the fee plan either, but they're also not going to break the peace talks over it. European officials have said they want to make sure any arrangement is consistent with international law, but that's a diplomatic way of saying they're not going to stop it if it happens.
So, the only one with a clear line in the sand is the US. And the US is in a tough position because their credibility is on the line and their military options are not great and their domestic politics are a mess because nobody wants another war in the Middle East. Not after everything that's happened over the last few years.
So where does that leave us? It leaves us in a waiting game. Iran is waiting to see what the US will actually do. The US is waiting to see if Iran is bluffing. Oman is waiting to see if it can find a path through the middle. And China, China is just waiting, watching, seeing how this all plays out. Because China has the most to gain from a weakened US and a system where Iran gets to make its own rules in the Strait of Hormuz.
And I think that's what I want you to hold on to when you think about this whole thing because this isn't just about a shipping lane. It's about who has the power to shape the global order. The US has been the dominant power for so long that we kind of take it for granted. We assume that what the US says goes. But Iran is saying something different. Iran is saying not anymore. And the fact that they're saying it with China as the audience, that's not an accident. That's the future they're trying to build. A future where the US is one player among many. A future where the straight of Hormuz is controlled not by the US Navy, but by Iran and its partners. A future where the price of oil is set not by market forces alone, but by political calculations about who's friendly and who's not.
And you know what? That future might actually be coming, whether we like it or not, because Iran has already shown that it's willing to take risks to get what it wants. And the US has already shown that it's willing to negotiate from a position of weakness. And when you combine those two things, you get a situation where Iran can make demands and expect to get at least some of them.
So let me ask you again, and I want you to think about this seriously. What do you think happens when those 60 days are up? When the free transit window closes and Iran starts charging these fees and the US says, "No, you can't do that." What happens? Does the US back down? Does Iran back down? Does the whole thing just break down and everyone goes back to fighting?
I honestly don't know. I've gone back and forth on this myself. Part of me thinks Iran will find a way to thread the needle. They'll offer discounts to everyone. They'll create exceptions. They'll make it so the fees are low enough that nobody wants to fight over them. and they'll get what they really want, recognition that they control the strait. They might even get the US to grudgingly accept it, not officially, not publicly, but quietly behind the scenes.
But another part of me thinks this is the thing that breaks the negotiations. That the US can't accept the president. That Rubio and Trump are too committed to their position. That the Gulf States will push harder. That the pressure will be too much and everything will fall apart. And if that happens, then we're back to war or something close to it. And I don't think anybody wants that. Not the US, not Iran, not Oman, not China, not the world. But wanting something doesn't always mean you get it. Sometimes the momentum of events carries you past the point of no return.
So that's where we are right now today. Iran has made its move. The US has drawn its line. Oman is trying to find a middle ground. China is watching. And the rest of the world is waiting to see what happens next. This isn't over. not by a long shot. And the next few weeks are going to tell us a lot about how the next few years are going to go.
One last thought before I wrap up. The ambassador said Iran would give special treatment to countries that stood by them during the hard times. That's the past. But what about the future? What about the countries that stand by Iran in the future? That's the question Iran is really asking. And the answer to that question is going to reshape the entire Middle East. We'll keep watching this and I'll be back with more once something breaks. Thanks for sitting with me through this one. I know it's a lot to take in, but I think it's important to understand what's really happening under the surface. Keep your eyes on the straight of Hormuz because whatever happens there, it's going to affect all of us. and I'll see you in the next.