Countries, the United Nations says, have argued over waters for as long as ships have sailed – perhaps from the time Egyptians first plied the Mediterranean in papyrus rafts.
In 1493, the year after Christopher Columbus reached America, Pope Alexander VI attempted to settle one such quarrel between Spain and Portugal, the great maritime powers of the day, by drawing a line down the Atlantic. In a public decree called the papal bull inter caetera, he gave Spain everything west of that line and Portugal everything east of it. On that reckoning, the Pacific and the Gulf of Mexico became Spain’s, and the South Atlantic and the Indian Ocean, Portugal’s. A follow-on treaty between the two powers, signed at Tordesillas in 1494, shifted the line further west.
Despite that neat ‘solution’, the disputes never really ended.
In its war with the US and Israel, now in its sixth month, Iran has repeatedly staked claim to the Strait of Hormuz, launching missile and drone strikes against vessels that it says did not take its permission to cross the waterway. Tehran has also said it will restart charging ships that want to transit Hormuz for “navigation, security and environmental services”.
With much of the Gulf reliant on the strait for trade, Oman – the strait’s other bordering country – made another pitch. A Western diplomat and a source said Oman has presented Iran with a plan – backed by other West Asian countries – to manage the strait and collect voluntary fees for using it, Reuters reported.
The proposal is meant to serve as the basis to end the trade disruption, though a US official said Washington won’t allow Tehran to control the strait with toll or fees in any manner. It is an international waterway that should remain free of any restrictions, the official said.
Separately, Iran-backed Houthi groups have begun considering a toll schedule for ships passing through the Bab al-Mandab, another narrow waterway at the mouth of the Red Sea.
All of it brings into spotlight functioning of straits and waterways around the world. Here’s what that looks like:
How modern rules came to be
Workable international rules for straits came much later. In the 17th and 18th centuries, coastal countries began asserting sovereignty over a belt of sea running along their shores, framed initially as a zone of protection against smugglers and warships.
The 18th century then produced the so-called cannon-shot rule: a state could claim sovereignty as far as its shore-based cannons could fire. That distance was reckoned at roughly one marine league, or about 5.6km – the origin of the traditional three-nautical-mile territorial sea.
The three-mile limit held into the 20th century, then began to give way after the Second World War.
In 1945, US President Harry S Truman unilaterally extended American jurisdiction over the natural resources of the continental shelf. Argentina followed in 1946. Chile and Peru asserted 200-nautical-mile zones in 1947, and Ecuador in 1950.
Egypt, Ethiopia, Saudi Arabia, Libya, Venezuela and several eastern European countries began claiming 12-nautical-mile (about 22km) territorial seas. Indonesia, in 1957, drew straight baselines around its more than 17,000 islands and declared the waters within them internal.
By the late 1960s, offshore oil production had grown and drilling went deeper. At the same time, nuclear submarines were charting deep waters, antiballistic missile systems for the seabed were on the drawing board, and supertankers ferrying Gulf crude through congested straits were leaving oil spills in their wake.
On November 1, 1967, Malta’s ambassador to the UN, Arvid Pardo, told the General Assembly the oceans were heading for a crisis. He called for an effective international regime over the seabed and ocean floor beyond national jurisdictions, warning that anything short of that would fuel escalating conflict.
His speech set in motion the Third United Nations Conference on the Law of the Sea (UNCLOS), which convened in New York in 1973 and, nine years later, produced UNCLOS.
The convention was adopted at Montego Bay, Jamaica, in December 1982 by a vote of 130 in favour, four against and 17 abstentions, according to Lewis M Alexander’s chapter on international straits in the US Naval War College’s Law of Naval Operations. The US, wary of the seabed mining regime in the convention, did not sign it; Iran signed it in 1982 but never ratified it. Neither country is a party to the convention today, though the US observes most navigational provisions as customary international law.
UNCLOS fixed the territorial sea at 12 nautical miles (about 22km), where the territorial claim still stands today.
The choke-point compromise
Fixing the territorial sea at 12 nautical miles created a new problem for the world’s naval powers. Even with that threshold, around 100 straits used for international navigation around the globe would be located within a country’s territorial waters. Strategic passages such as Gibraltar (about 13km wide at its narrowest), Hormuz (39km), Bab al-Mandab (26km) and Malacca (which narrows to under 3km at the Phillips Channel near Singapore) would be fully enclosed.
The US and the Soviet Union pushed for free passage through such straits, essentially treating them as high seas. Coastal countries, worried about foreign warships close to shores and about being drawn into other powers’ conflicts, insisted on “innocent passage” instead. This was conceived as a regime under which submarines would have to surface and show the flag, and foreign aircraft would have no right of overflight.
The compromise, hammered out over nine years of negotiation, was a new category called “transit passage”. Set out in articles 37 to 44 of the convention, it applies to straits used for international navigation between two parts of the high seas or an exclusive economic zone. Ships and aircraft — including submarines below waters and military aircraft overhead — have the right to continuous and expeditious transit, and coastal countries could not suspend it, it said.
Transit passage carried duties too. Vessels must comply with international pollution and safety rules administered by the International Maritime Organization (IMO), and coastal countries may prescribe sea lanes only in conformity with IMO standards.
The convention does not allow coastal countries to charge vessels simply for exercising the right of transit passage. But it does permit charges for “specific services rendered to the ship” such as pilotage or navigational aids, Bloomberg reported.
How straits are governed
UNCLOS did not supersede every earlier arrangement. Article 35(c) of the convention exempts straits where passage is governed by long-standing international conventions specifically covering them. As a result, the world’s waterways today fall into three broad categories.
Straits under transit passage
Most of the strategic natural straits — Hormuz, Bab al-Mandab, Gibraltar and Malacca among them — are governed by the UNCLOS transit passage regime, without special treaties.
Until before the war, Hormuz used to carry about a fifth of the world’s oil trade and ships would pay nothing to cross it. Bab al-Mandab – bordered by Yemen to the east, and Djibouti and Eritrea to the west – handled about 15% of global seaborne trade and more than 22,000 vessel transits a year until the Houthi attacks began in late 2023. Neither is covered by a special treaty, so both fall under the default transit passage regime.
The Strait of Malacca is jointly managed by Indonesia, Malaysia and Singapore and carries more than a fifth of the world’s seaborne trade — about $2.4 trillion worth (sourcing) — over an 800km route between the Indian Ocean and the South China Sea. Ships are not charged a transit toll there.
Instead, the three littoral states run a voluntary fund for navigational aids such as buoys, beacons and lighthouses, to which Japan, China, India, South Korea, the UAE, industry bodies and maritime foundations have also contributed. The fund had a balance of about $4.11 million at the end of the third quarter of 2025, according to the IMO, with a budget of $4.8 million approved for this year. (sourcing)
Indonesia briefly floated the idea of introducing Malacca transit charges after Iran shut Hormuz, but the country’s finance minister, Purbaya Yudhi Sadewa, walked back within days. Meeting Singapore Prime Minister Lawrence Wong in early July, Indonesian President Prabowo Subianto reaffirmed that Malacca would remain open in accordance with UNCLOS, Bloomberg reported.
Gibraltar, sandwiched between Spain and Morocco and just 13km wide at its narrowest, handles more than 100,000 commercial vessels a year, or roughly 10% of international maritime traffic. There is no fee to transit it.
The Taiwan Strait, through which about $2.45 trillion in trade transits annually, is a special case. China argues it is not international waters at all but part of its internal waters — a position the US and many other countries reject, continuing to sail naval vessels through it despite Beijing’s protests. Commercial ships are not charged.
Straits under special treaties
Article 35(c)’s exception preserves a handful of pre-UNCLOS arrangements.
The Turkish Straits — the Bosphorus, the Sea of Marmara and the Dardanelles — are governed by the 1936 Montreux Convention. More than 40,000 vessels transited them last year, carrying crude, gas, grains and containers between the Black Sea and the Mediterranean.
Montreux is also the natural strait-world’s clearest precedent for the kind of service-based fees Iran is now proposing. It permits Turkey to charge for lighthouse and salvage services, pilotage and, for large ships, mandatory tug escorts. Fees are calculated in gold francs — a historical accounting unit — with Turkey periodically updating the exchange rate.
Also read: When two wars meet at lake: Ukraine’s strike in Caspian Sea and the Iran-Russia angle
The convention also gives Turkey security levers. After Russia’s invasion of Ukraine in 2022, Ankara invoked Montreux to close the straits to warships, allowing an exception for Russian vessels returning to their home bases as the treaty permits.
The Danish straits — Little Belt, Great Belt and Oresund — draw on an 1857 treaty in Copenhagen that abolished the toll levied by Denmark on ships passing through the Øresund strait. Transit is generally free, though pilotage is mandatory for certain vessels and fees apply in those cases. Danish rules, most recently set out in a 1999 ordinance, require advance notification for foreign warships and demand that submarines surface.
The Strait of Magellan is regulated by the 1881 Buenos Aires Treaty between Argentina and Chile, and was reaffirmed in their 1984 Treaty of Peace and Friendship. Both countries have committed to keeping it neutral and open to shipping of all flags.
The Strait of Tiran, at the mouth of the Gulf of Aqaba, is covered by the 1979 Egypt–Israel peace treaty, which describes the strait and the Gulf as international waterways open to all nations for unimpeded and non-suspendable navigation and overflight.
Manmade canals
The Suez and Panama canals do not fall under UNCLOS at all. They are treated as sovereign infrastructure whose operators can charge for use, in the same way an airport charges a landing fee.
The 193km Suez Canal, opened in 1869, handled 26,434 vessels in 2023 and typically carries about 15% of global maritime trade. It is run by Egypt’s state-owned Suez Canal Authority, which sets tolls by ship type and cargo. A laden tanker of the most common type pays roughly $380,000 for a one-way passage.
The 80km Panama Canal, opened in 1914 and transferred from US to Panamanian control in 1999, handled 13,404 transits in fiscal 2025 and accounts for about 6% of global maritime trade. A medium-range tanker pays roughly $350,000 to $400,000 for a standard transit, according to Bloomberg. Auctioned slots during droughts or periods of congestion have gone significantly higher.
What this means for Hormuz and Red Sea
Because Iran never ratified UNCLOS, it does not owe the convention as a treaty. But the transit passage regime is widely regarded as customary international law, binding regardless of ratification.
The Houthi proposal for the Bab al-Mandab has no UNCLOS basis at all. A non-state actor cannot levy fees on international shipping under the convention.
