Iran is consolidating control of Hormuz with island checkpoints, diplomatic deals and sometimes 'fees'
Iran is enforcing a multi-tiered system for clearing vessels through the Strait of Hormuz as nations try to replenish dwindling energy supplies throttled by the war. The US has warned against complying with Iran’s controls. Some shippers and governments are taking the risk.
The tanker crew gathered their courage and carefully navigated along a route designated by Iran, hugging the coastline and manoeuvring their hulking vessel between island checkpoints through the Strait of Hormuz.
The 330-metre-long Agios Fanourios I, laden with Iraqi crude oil and bound for Vietnam, had been bottled up off the coast of Dubai since late April. But on May 10 it set off for the strait after a direct deal with Iran overseen by Iraq's prime minister.
Iran's orders to the tanker were part of a complex, multi-tiered mechanism that the country has deployed for clearing vessels through the Strait of Hormuz. With Iran now in de facto control of the strait, the system can involve government-to-government arrangements, intense vetting by the Iranian government and sometimes fees in exchange for safe passage, Reuters has found.
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In Vietnam, Iraq, Greece and beyond, the ship's progress was monitored closely, including by two people interviewed by Reuters. Periodically, the transponder went dark but the Agios Fanourios I sailed on. Not far away that same day, another ship was hit with a projectile, causing a small fire, according to a British maritime safety agency.
Late on May 10, screens lit up with the icon for the Agios Fanourios I. But as the tanker passed Hormuz Island, it was stopped by Islamic Revolutionary Guard Corps speedboats, according to an Iranian official.
The IRGC fighters patrolling the strait, who had initially let the vessel through, now ordered the ship to halt. The Iranian official said there was a suspicion of smuggled cargo and they wanted to inspect the ship.
Several hours later, the vessel received Iranian authorisation to continue, turning what is typically a five-hour transit through the strait into a two-day ordeal.
"Once we were informed Agios passed Hormuz, we breathed a sigh of relief," said one of the people monitoring the journey.
No payments were made, said the ship's manager, Eastern Mediterranean Shipping and six people with knowledge of the passage.
"We have reasons to believe that Iranians turned a blind eye to the transit of Agios Fanourios I, following pressure from Iraq and Vietnam," Konstantinos Sakellaridis, operations manager for Eastern Mediterranean Shipping, wrote in a response to questions from Reuters.
Iran's government did not respond to a request for comment about the new mechanism or the journey of the Agios Fanourios I.
Iran's grip on the Strait of Hormuz, the conduit for about a fifth of the global oil supply, has thrown the world economy into turmoil. To reveal how Iran has been consolidating control over this strategic chokepoint in recent weeks, Reuters interviewed 20 people with knowledge of the evolving mechanism, including Asian and European shipping sources and Iranian and Iraqi officials, reviewed Iranian documents related to the vetting process, and analysed movements of ships. Taken together, they offer rare insight into how the Iranian scheme functions, with the powerful Islamic Revolutionary Guard Corps playing a central role.
All the sources asked not to be named because of the sensitivity of the subject. Some of the details of the journey of the Agios Fanourios I could not be independently verified, but they corresponded with accounts from multiple other maritime officials involved in managing and navigating the same route for both cargo ships and tankers.
By early May, around 1,500 vessels with about 22,500 sailors aboard were trapped in the Gulf, according to the US military. That maritime bottleneck stems from Iran's ability to strike ships in the strait from along the coast. Its grip has transformed the conflict into what the head of the International Energy Agency described as the world's worst ever energy crisis. The US Navy has responded by imposing its own blockade of Iranian ships and cargo with a cordon outside the strait.
Only a trickle of vessels have passed through the waterway. Between April 18 and May 6, fewer than 60 ships made it through, according to unpublished analysis by US firm SynMax Intelligence. Before the war, some 120 to 140 ships traversed the strait on a typical day, about half of them oil tankers.
American citizens are prohibited from engaging in transactions with the Iranian government under US sanctions laws. Non-Americans may also face "secondary sanctions" for dealing with Iranian entities. In addition, many Western governments maintain their own sanctions and restrictions relating to Iran.
The US Treasury Department issued a statement on May 1 warning "about the sanctions risks of making these payments to, or soliciting guarantees from, the Iranian regime for safe passage."
The new Iranian mechanism includes a tiered system giving preference to ships linked to its allies Russia and China, followed by countries such as India and Pakistan with close ties to Tehran, and then government-to-government agreements that let vessels like the Agios Fanourios I pass, Reuters found.
"The department is prepared to take action against any foreign company supporting illicit Iranian commerce," the US Treasury Department said in response to questions from Reuters about the system.
Reuters could not independently determine how many vessels have used the scheme so far. Iran has said ships linked to the United States or Israel, which launched aerial attacks on Iran in late February, may not cross the strait.
Two European shipping sources said some vessels that aren't covered by government-to-government deals are paying Iranian authorities upwards of $150,000 to secure safe passage through the Strait of Hormuz.
Ships are sometimes charged security and navigation fees, which vary according to cargo, two senior Iranian officials told Reuters. Neither official provided specific figures, but one said "not all countries are subject to these charges."
Reuters could not independently confirm the sums being levied on vessels or the total amount that has flowed into Iranian coffers.
'The new norm'
Under international maritime law, governments cannot charge for safe passage through a strait. But there can be fees associated with security or services as long as ships of all countries are treated equally.
These payments and the names of ship owners who have paid Iranian authorities to extract their vessels are closely guarded secrets, as such payments would violate US economic sanctions on Iran's government. Reuters could not determine how the money was transferred or to which Iranian entity.
In addition to possible charges, violators would also lose their insurance coverage for making payments that could benefit the IRGC, because it is an internationally designated terrorist organisation, according to two maritime insurance experts.
Some will get through because of political alliances, others will have to pay, others will be turned back. This is the new norm.
Danny Citrinowicz, senior Iran researcher at Israel's Institute for National Security Studies
Ship owners' willingness to deal directly with Iran despite the risks shows the degree to which the strait is under the Islamic Republic's control, said Danny Citrinowicz, a former Israeli intelligence officer who specialises in Iran research and analysis.
"The straits will be blocked or opened up only by the approval of the Iranian regime," said Citrinowicz, who is now at Israel's Institute for National Security Studies think tank. "Some will get through because of political alliances, others will have to pay, others will be turned back. This is the new norm."
In a response to the Reuters findings about Iran's new control mechanism, China's Ministry of Foreign Affairs called for Hormuz to be opened and said it was concerned about "future arrangements for the strait."
"Such arrangements should comply with international law and practice, and take into account the legitimate security concerns of coastal states and the legitimate demands of regional countries and the international community," the ministry's statement said.
Affiliation checks
Outside of government agreements, the process to secure Iranian permission to transit involves a detailed vetting procedure conducted by the Islamic Revolutionary Guard Corps, Iran's elite fighting force, according to three Iranian sources and a European shipping source. The IRGC reviews a so-called affiliation document supplied by a ship owner or operator and submitted through an intermediary, the sources said.
"The affiliation check is to identify if the vessel has any connection to the US or Israel," said the European shipping source. It takes about a week for the Guards to review documentation, and during the process they may want to physically inspect the ship, the source said.
The IRGC requires ship owners to disclose details including the value of the ship's cargo, the flag, its origin and destination, the registered owner and manager, and nationalities of the crew, according to documents reviewed by Reuters that were sent to shipping industry sources by Iran's Persian Gulf Strait Authority. The authority was set up in recent weeks to approve and tax vessel transits.
The vetting is carried out by Iranian state institutions including the Ports and Maritime Organisation, the Ministry of Industry, Mine and Trade, the national shipping organisation, and the security overseer of the Supreme National Security Council, according to the three senior Iranian officials. The IRGC, which has broad oversight over Iranian security, is also involved in evaluating the ships, the officials said.
Bilateral arrangements for passage include an additional step: Countries contact Iran's foreign minister to request permission. The minister forwards these to the Supreme National Security Council, which includes the IRGC and representatives of Supreme Leader Mojtaba Khamenei, one of the officials said.
"A decision is then made and communicated to the relevant bodies, including the IRGC," the official said. He added that the IRGC provides the coordinates and instructions needed for safe passage.
For the Agios Fanourios I, Iraq's government worked alongside its state owned oil marketer, SOMO, to hammer out a deal with Iran under the supervision of then-Iraqi Prime Minister Mohammed Shia al-Sudani, according to two sources with knowledge of the arrangement.
Three Iraqi oil ministry officials said they transmitted the manifest and crew information of the Agios Fanourios I to the Iranians before passage.
The Iraqi government did not respond to a request for comment about its arrangements with Iranian authorities or specifics about the Agios Fanourios.
Other countries have worked out different arrangements. Among them is India, which imports about 90% of its oil needs and about 50% of its gas, much of which passes through Hormuz.
New Delhi uses its embassy in Tehran to liaise with Iranian authorities, including the IRGC and the Iranian navy, which vets ships India wants to sail out of the Gulf, according to an Indian shipping ministry official.
"Once everything is verified, the ship captain is given a route to follow, and the ship sails out of the area with guidance from the Iran navy. The captains are strictly told to follow the given route," the official said. Ships are told to turn off their location transponders and not use satellite communications, he added.
After Iran grants permission, the Indian Navy directly contacts shipmasters of Indian-flagged vessels in the Gulf and gives them waypoints, said an Indian shipping industry source with direct knowledge of the process.
"The Indian navy also told us that if the Iranians ask you to stop, then you should stop. If they ask you to move, you should move," the source said, "And we've been following those instructions."
So far, 13 Indian-flagged vessels have cleared the Strait of Hormuz, while 13 remain stranded west of the waterway, India's Shipping Ministry said on 14 May.
India, Russia, Pakistan and Vietnam did not respond to requests for comment about Iran's controls of the strait.
Fraught passage
For many vessels, the route out of the Gulf and through the Strait of Hormuz involves clearing multiple Iranian waypoints, often staffed by armed personnel, according to two shipping industry sources and three Iranians.
The Agios Fanourios I steered past Iranian military checkpoints at Abu Musa, Greater Tunb and Larak. Reuters verified those coordinates from the ship's publicly available location data and multiple sources aware of similar journeys.
When it neared Hormuz Island, by the mouth of the strait, the vessel was briefly stopped by the IRGC speedboats, according to the Iranian official familiar with the incident that day. He said there was information about possible smuggled cargo on board.
The information proved to be incorrect, he said, and after a brief period of confusion and an inspection of the ship, the Agios Fanourios I continued its journey.
Similarly chaotic communication was the likely cause for an attack on two Indian-flagged ships attempting to cross the Strait of Hormuz last month, the Indian shipping industry source said. The incidents have frightened Indian sailors stuck in the Gulf.
"These ships don't have armour or anything of that sort," said the Indian shipping source. "The bullets pierce through." The only targets for the shooters, he added, are the crew quarters: "They can't shoot at the tanks because these are carrying flammable liquids."
An Indian sailor who made it through the Strait of Hormuz aboard a bulk carrier said the ship waited in the Gulf before his shipping company secured permission from the IRGC. It was then instructed to approach Larak Island and the Iranian navy established contact. Naval officials ordered the captain to display the vessel's flag and divulge ship details, then began discussions with the shipping company. The Iranians repeatedly asked about the crew's nationality, the sailor said.
"After a couple of hours, the captain received a route from the IRGC," he said. Escorted by smaller Iranian navy boats, the ship was told to steer carefully for fear of sea mines. "It was a frightening sight," he said. "Even in my wildest dreams, I cannot imagine going to sea again during a war."
But even for vessels that make it through the Strait of Hormuz, the ordeal isn't necessarily over.
A day after it exited Iranian waters, the Agio Fanourios I was snared in the US Navy's blockade. For six days, the tanker drifted in a tight triangle as the American military ran through its paperwork.
"US forces directed the Malta-flagged vessel to turn around as part of our enforcement of the ongoing blockade," said Capt. Tim Hawkins, spokesperson at US Central Command.
Sakellaridis, the operations manager for Eastern Mediterranean Shipping, said Vietnam pressured the United States to let the ship pass. There was no reason for it to be stopped to begin with because, he added, the "vessel and cargo had no Iranian involvement."
Reuters could not determine how many other ships have been halted by the Americans since the blockade was put in place on 13 April.
The Agio Fanourios I was released on 16 May without explanation. It is now bound for Vietnam, loaded with 2 million barrels of crude.
