Hall of Muzz fees unstoppable? Europe reportedly believes payment is inevitable, Oman shares official plan with Europe and the US

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Major European powers have privately accepted that tolls for the Strait of Hormuz are inevitable. Oman’s formal proposal is circulating between the US and Iran, as the game around this critical waterway is profoundly reshaping the postwar Middle East order.

The funeral for Iran’s late Supreme Leader Ali Khamenei is approaching, and indirect US-Iran talks in Qatar are temporarily on hold, but the issue of tolls for the Strait of Hormuz has moved beyond mere negotiation-table disputes. According to reports from two US media outlets on Thursday, several major European powers have privately come to see some form of transit fee as a fait accompli, and Oman has already submitted a formal proposal to the United States and its Western allies.

One US outlet, citing informed sources, reported that some European countries now privately accept that ships transiting the Strait of Hormuz will have to pay some kind of fee to Iran and Oman, describing this outlook as “established fact.” Another US report, quoting an Iranian official and four informed diplomats, said Iran and Oman (a US ally) are advancing the toll plan, even as Washington publicly states its opposition.

Also on Thursday, Iran issued a new warning requiring ships to follow routes designated by the Iranian government when passing through the Strait of Hormuz, or else “face an immediate and forceful response” from Iranian armed forces.

Postwar management of the Strait of Hormuz has become one of the most explosive core topics in US-Iranian peace talks. Before the conflict, this waterway carried about one-fifth of the world’s oil and liquefied natural gas supply. The ongoing negotiations will directly impact long-term expectations for the global energy market’s stability.

Funeral of Iran’s Late Supreme Leader Interrupts Indirect Talks; Qatar Says Next Meeting Will Be Arranged Soon

Reports say the Iranian negotiation team left Qatar’s capital Doha this Wednesday, ending a round of indirect US-Iran talks brokered by Qatar and Pakistan. The talks were paused as Iran prepares for memorial and funeral events for the late Supreme Leader Ali Khamenei, with the funeral commencing Friday, July 4.

According to Xinhua, citing Iran’s publication of the plan, public mourning and farewell events begin July 4 in Tehran, while the burial ceremony for Khamenei and his family is on July 7 in Qom. At the request of various Iraqi groups, burial ceremonies will be held in the Shiite holy cities of Najaf and Karbala, Iraq, on July 8. On July 9, a burial ceremony will be held in Mashhad, a holy city in northeastern Iran.

Qatar said this round of indirect US-Iran talks through intermediaries achieved “positive progress,” and both sides agreed to “arrange” the next round of talks as soon as possible after the funeral.

US President Trump said Wednesday that the negotiating teams have made progress, saying, “We're getting along very well.” US envoy Witkoff and Trump’s son-in-law Kushner attended the Doha talks, aiming to advance a memorandum of understanding signed about two weeks ago. This initial ceasefire deal opened a 60-day negotiation window, addressing Iran’s nuclear program and billions of dollars in frozen funds.

The funeral period hasn’t been uneventful. Iran’s military warned the US and Israel against attacks during the funeral events, while, on Thursday, it again warned ships to follow Tehran’s designated Hormuz routes.

Oman Submits Formal Proposal; US Expresses Concern

According to the New York Times, Oman recently shared a formal proposal with the US and other Western allies outlining a plan for shipping companies to pay service fees for using the Strait of Hormuz. The proposal is reportedly based on the management model of the Malacca Strait. In Malacca, a multilateral fund collects voluntary contributions from various parties, which are used to support navigation safety.

However, the distinction between “voluntary” and “mandatory” fees has become a focal point of contention. Someone familiar with Washington’s stance said US negotiators have received Oman’s proposal and have several concerns that will be discussed with Omani officials at a technical level. Both this person and a regional diplomat indicated the proposal references voluntary rather than compulsory fees, but Iranian officials have clearly stated that payment will be mandatory.

Oman’s foreign minister Badr has recently taken an ambiguous public stance. On one hand, he rejects tolls for shipping through the Strait of Hormuz as illegal. On the other hand, he distinguishes between “transit fees” and “charges for services provided by coastal states” and says ensuring safety, anti-pollution measures, and emergency maritime response in the strait “certainly require funding,” referencing the precedent of the Malacca Strait.

Iranian Deputy Foreign Minister Gharibabadi stated that Iran’s government will prioritize reaching an agreement with Oman, but if Oman is unwilling to establish a joint management framework, Iran will proceed independently. Iranian Foreign Minister Araghchi previously made clear that the Strait of Hormuz will not return to its prewar status of free passage.

Europe Privately “Compromises,” US Official Stance Remains Hardline

Europe’s shift is one of the most notable signals in this round of reporting.

Bloomberg on Thursday quoted sources saying that some Gulf Arab officials also privately hold this view, although it may not be their governments’ official position. Although European countries accept the inevitability of fees, they are pressuring Iran and Oman not to discriminate against ships based on flag, while the UK, France and others are promoting the establishment of an international maritime coalition to help clear mines in the Strait of Hormuz—deployment of which will depend on progress in negotiating a permanent peace agreement.

The official US stance sharply differs. During his recent trip to the Middle East, Secretary of State Rubio stated clearly in Bahrain that the US will oppose any plan to monetize use of the strait, regardless of whether it is called a “fee, toll, or donation,” and demanded a return to the pre-conflict status of the waterway.

The Bahraini government issued a statement saying it did not accept and did not even imply acceptance of any fee or toll for transiting ships, and stated, “Free passage for international ships through the strait is an issue of international law, not negotiation.” Saudi Foreign Minister Prince Faisal bin Farhan said the Strait of Hormuz “must revert to prewar status.”

Main Sticking Point: Control of the Strait

The dispute over control of the Strait of Hormuz highlights the far-reaching and likely irreversible impact of this US-Iran conflict on the Middle Eastern order. According to the New York Times, analyst Anna Jacobs, who has studied Oman, emphasized that the strait’s future is an “urgent national security issue” for Oman. Oman views the conflict and regional security with a long-term perspective and is committed to keeping Iran at the negotiating table.

On the ground, shipping through Hormuz is still in a fragile recovery phase. Bloomberg reports that since the US and Iran signed their interim agreement, commercial shipping has increased, and Saudi oil transit has recovered to over half prewar levels (over 10 million barrels per day). Iran’s own crude exports have also picked up with the lifting of the blockade. But according to The Maritime Executive, some vessels still transit the strait with their AIS systems turned off; the situation could reverse at any time.

Last week’s tension demonstrated this fragility: Oman and the International Maritime Organization designated a safe route that only crosses Omani territorial waters. Iran responded by attacking a cargo ship, causing the IMO to suspend evacuating hundreds of stranded ships in the strait.

IMO Secretary-General Arsenio Domínguez stated that mandatory tolls or any system hindering freedom of navigation in international waters violate international law, but a voluntary fund scheme is feasible. He is discussing the Malacca management model with Omani officials and plans to explore options with member states.

The US-Iran memorandum of understanding stipulates that merchant ships can pass safely and toll-free during the 60-day talks, and requires Iran and Oman to negotiate arrangements for the future of the strait.

But Mehdi Mohammadi, a senior adviser to Iran’s government, said that for Tehran, the name of the fee is not important—“Call it a toll, safety service fee or sea transit fee”—but “nowhere in the world are such services free.”

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