A Possible Solution for the Strait of Hormuz Crisis
Posted on 27 Mar 2026; 11:30 PM IST. Last Updated 28 Mar 2026; 00:10 AM IST.Summary: This article details a possible solution for the Strait of Hormuz crisis.
The current crisis at Strait of Hormuz, turned into a major choke point for global energy trade, and
a timely intervention is necessary, to prevent irreversible damage to world economies.
A possible solution delves in establishing sovereignty of the strait. Based on geography of the strait,
it is easy to observe that there are 7 countries around it, namely, Iran, Iraq, Kuwait, Saudi Arabia, Qatar,
United Arab Emirates (UAE), and Oman. Iran’s claim of sovereignty over the strait of Hormuz is moot, and lacks a formal basis.
In comparison, the Suez canal passes exclusively through Egypt, which controls both sides of the canal.
The Strait of Hormuz must therefore be controlled by a business consortium of the seven nations around it.
Iran’s claims for collecting transit tax cannot be disregarded in their entirety. The taxes could be
collected by the Strait of Hormuz Business Consortium (SHBC), and shared with their members,
based on percentage of the total perimeter of the strait, located in their nation. Iran roughly
has 50% of the total perimeter of the strait of Hormuz, and therefore would be entitled to roughly 50% of
the taxes collected.
The transit tax must be limited to 1% of trade (or one dollar for every 100 dollars of trade). If a barrel of
oil costs $70 USD on the average, then the transit tax would be 70 cents.
It is estimated that roughly 20 million barrels of crude oil is traded everyday, through the Strait of Hormuz.
The transit tax (on a barrel of oil at $70 USD), would come down to, $14 million per day, or roughly,
$5 billion USD per year.
Iran’s share of the transit tax would be roughly 50%, or $2.5 billion USD per year, based on perimeter of
strait, controlled by Iran.
The author of the article believes that the transit tax earnings on crude oil, using the above logic, are
comparable to the earnings of Suez Canal. It may be noted that Crude oil refining is not a very profitable
business, and the margins are thin, so the transit tax must be absorbed by the Oil producing nations.
The role and objectives of US in the new Strait of Hormuz Business Consortium (SHBC), are detailed below.
- US would act as a member of the new Strait of Hormuz Business Consortium (SHBC), but shall not receive any portion of the transit taxes collected (since, its perimeter in Strait of Hormuz is zero).
- US would protect the interests of the Strait of Hormuz Business Consortium, and will ensure that the Strait of Hormuz, is not blocked for trade.
- Iran should abide by the norms prescribed for Nuclear enrichment, and possession of Nuclear devices.
- Iran should abide by the norms prescribed for ballistic missiles possession, use, manufacture, and export.
- The members of Strait of Hormuz Business Consortium, shall refrain from hostilities, toward one another.
- US and its Strait of Hormuz Business Consortium allies, should refrain from supporting the aggression and/or expansion of Isreal, towards Iran and its allies.
- Iran and its allies, should refrain from attacking the interests, facilities, and bases of US, and its Strait of Hormuz Business Consortium allies.
Remarks
Iran should refrain from making claims for war reparations, as they are unviable, and could hinder the progress for peace. Iran could reap monetary benefits for relinquishing hostilities, in the form of trade deals and/or removal of sanctions.