Happy is he, like the toll collector, who has paid his toll. A few minutes before the end of Donald Trump’s ultimatum, Iran announced the reopening of the Strait of Hormuz, through which 20% of the world’s oil transits. This news is a relief to the global economy, which has been suffering since the closure of this ultra-strategic maritime channel. Back to normal, or almost. The Islamic Republic has set a condition: from now on, every tanker that passes through will be taxed. The strait has thus become a giant toll booth. As for the entrance fee or conditions, Iran has not said anything yet.
It is difficult to visualize the concrete consequences of this situation, which is both unclear and unstable. “In any case, the situation will be preferable in these recent weeks,” says economist Patrice Geoffron, director of the Center for Geopolitics of Energy and Raw Materials (CGEMP) at the University of Paris-Dauphine. Simply put, it is better to have very expensive oil than no oil at all. This is particularly true for Asia, the main customer of the Strait of Hormuz (80% of strait transactions end up on this continent), where fuel restrictions were becoming very strong.
In India, for example, it was prohibited to fill more than half of the tank at gas stations. Some factories on the continent have closed. In Vietnam, many airplanes have been grounded. The Pakistan Cricket Board ordered sports fans to stay home and watch the matches on television to conserve fuel instead of paying a tax.
Prices will remain high
“Unless there is a truly prohibitive tax, the current situation, with an open but taxed strait, is far from ideal but still much better,” says economist Sylvain Bersinger, head of the Bersingeco consultancy. Especially since Iran may exempt some allied countries from its tax, such as China, one of its largest customers and an essential pillar in its struggle against the United States. Some special privileges would make “the situation even better,” according to Sylvain Bersinger: exempt countries would massively buy oil from Hormuz, while taxed countries would turn to other producers like the United States or Russia, which will be the big beneficiary of this crisis.
The price will remain high. Beyond this new tax, the impact of the war will not disappear at the first ceasefire, warns Patrice Geoffron. Many Gulf infrastructures – in Iran or neighboring countries – have been damaged and will take months, even years, to resume production. “It is difficult to say if this operation will be profitable for some. Especially, as the area will remain risky for a long time, some consumers will probably prefer to buy oil and gas from Russia,” warns the expert.
A situation that could evolve further – or worsen
Could the reopening of the Strait of Hormuz also lead Gulf countries to advance on titanic projects to transport oil elsewhere, like pipelines or oil pipelines? Possible, but far from miraculous, says Patrice Geoffron: “It would take time and it is difficult to establish in a zone where security is guaranteed. For example, the pipeline that crosses Saudi Arabia is blocked in the Red Sea, which is also a tension zone.”
In any case, there is no guarantee that things will remain the same. “Even if the situation is better economically, it is not certain that diplomatically countries will accept being extorted as if Iran were a mafia,” questions Sylvain Bersinger. And he insists: “This tax will inevitably create tensions, at least diplomatically, if not militarily.” The situation could quickly escalate into a new crisis.
