Trump's Hormuz toll would cost more than the conflict it follows
A 20% cargo charge on Hormuz traffic would add over $100 billion annually to oil costs alone, compounding a disruption that has already broken energy markets.
A proposal from Donald Trump to levy a 20% charge on the commercial value of all cargo transiting the Strait of Hormuz would, if enacted, impose costs on global energy trade that dwarf the insurance surcharges and routing disruptions already roiling the market.5
Before the conflict, approximately 21 million barrels of oil and petroleum products passed through the strait each day, according to EIA data. At $70 per barrel, that flow represents cargo worth roughly $1.47 billion daily. Applying a 20% toll would add around $294 million per day — more than $107 billion per year — to oil shipments alone. At current ICE Brent crude front-month prices of $85.56, the annual charge would push well above that figure. The LNG toll comes on top: roughly 10 billion cubic feet of gas transited the strait each day before the disruption, primarily from Qatar, and those volumes are not included in the oil calculation.5,1
The market has spent two months focused on the disruption itself. Insurance costs, tracker blackouts and ceasefire fragility have absorbed most of the analytical bandwidth. Three tankers carrying a combined 6 million barrels exited the strait with tracking systems switched off on Monday (2026-05-18), according to shipping data from Kpler and LSEG, illustrating how far physical conditions remain from normal despite Iran's official declaration of open passage.2 Argus Media reported that maritime traffic remains at near-standstill due to insurance hurdles and geopolitical demands even after Iran agreed to reopen the strait for safe passage.4
ICE Endex TTF front-month was trading up 21.3% on Tuesday (2026-07-14) to €53.60 per megawatt-hour, reflecting persistent anxiety about LNG supply availability. That is well below the spike seen in mid-May, when TTF surged 35% in a single session on Tuesday (2026-05-19) to breach €60/MWh, and weekly gains ran to 76%, according to CNBC. Goldman Sachs estimated the initial disruption reduced near-term global LNG supply by about 19%.3
What the toll proposal adds is a second, entirely separate cost layer — one that would apply regardless of whether the strait itself is physically open. A 20% ad valorem charge is not an insurance premium that normalises when risk recedes. It is a permanent tariff on passage, and its legal basis under the United Nations Convention on the Law of the Sea is, at minimum, contested. The principle of innocent passage through international straits does not permit transit states to impose charges of this kind.5
The distributional effects are asymmetric in ways the current market conversation understates. EIA data show that 82% of the crude oil and condensate moving through Hormuz in 2022 went to Asian markets. A 20% toll falls heaviest on buyers in Japan, South Korea, China and India — not on European consumers already sourcing more LNG via Atlantic routes. JKM, the Asian LNG benchmark, was at $16.65 as of Tuesday (2026-07-14), but the structural exposure of Asian importers to a permanent Hormuz surcharge would likely price into the forward curve well before any formal implementation.1
Bypass infrastructure exists but cannot absorb the full flow. Saudi Aramco's East-West pipeline, which runs from the Gulf to the Red Sea port of Yanbu, has an effective capacity of around 7 million barrels per day after a 2019 expansion. The UAE's pipeline linking onshore fields to the Fujairah terminal handles 1.5 million b/d. EIA estimates put total effective unused bypass capacity at roughly 3.5 million b/d — meaningful, but covering only a fraction of the 21 million b/d that transited Hormuz daily in 2022. LNG has no comparable bypass. Qatar's production has no alternative export route.1
The contrarian point is not that oil prices are too high — the physical disruption is real, and the strait remains functionally impaired. The overlooked angle is that a toll would institutionalise cost inflation in a way that outlasts any ceasefire. Stifel analyst Chris Wheaton noted that around 25% of Europe's total gas supply is LNG; a prolonged Hormuz disruption comparable in scale to the 2022 Russia shock remains a credible tail risk. The toll proposal, if pursued, transforms that tail risk from temporary to structural.3
What to watch: whether the Trump administration pursues the toll through any formal mechanism, and whether Asian sovereign buyers — whose import bills would rise by tens of billions annually at current volumes — respond by accelerating offtake contract negotiations with Atlantic Basin suppliers, which would put medium-term pressure on the TTF-JKM spread regardless of what happens to the strait itself.5,1