Iran-US peace deal: Strait of Hormuz reopening uncertain amid ‘toll vs service charge’ row, mines danger, sailor killings

The good news is that the US and Iran on Sunday (Jun 14) reached a peace Memorandum of Understanding (MoU), to be signed on Friday. But the bad news is, there still appears to be differences over the full reopening timeline for the Strait of Hormuz. US President Donald Trump announced the immediate lifting of the US naval blockade. He said the strait will reopen on the signing of the MoU, and added it will be "permanently toll-free." The MoU reportedly covers a drawdown of US forces. But the fog of war continues.

What is the toll vs service charge row on Strait of Hormuz?

Trump and US officials are reportedly insisting on a permanent toll-free passage and immediate reopening of the strait. Iran appears to have agreed to no formal "tolls" but still seeks "service charges" or fees for navigation aid, security, and environmental services. This is not new. Iran had traditionally maintained control and management of the strait, and fees were indeed paid for transit. An Iran-Oman mechanism is currently in place under the new Persian Gulf Strait Authority, requiring vessels to apply and disclose ownership, cargo and insurance.
The US and allies are rejecting the fees as violations of international law. This is causing a nomenclature row: 'toll' or ‘service charge’?

Will US Navy blockade continue?

Trump authorised an immediate removal of the US naval blockade. Upon signing of the MoU, the US Navy will stand down. But this appears to be contingent on the Strait being toll-free and immediate restoration of full international access. Iran is insisting on management of the strait , with no full ceding of control over the chokepoint foreseen in the near future. Israel, the main party to the conflict, is overall sceptical of the Iranian compliance to the MoU, including on the Hormuz terms.

When will ship traffic resume in Strait of Hormuz?

The initial reopening of the strait is likely after Friday's signing, but past days have not been hopeful. The strait was partially open to traffic, but ship firms were scared away by the bombings by the US on vessels, which left sailers inlcuidng indians dead. The mine-laying by Iran had complicated matters. Clearing the mines would take at least 30 days. Full normalisation might take another six months, as per some analyst estimates. The lingering distrust, fee disputes, and verification issues are likely to delay full normalisation.

Currently, there is a 60-day window available for the Hormuz reopening. But that will close unless deeper talks are not agreed upon, and held on other issues such as Iran's nuclear and missile programmes.
By some analyst estimates, mine clearance could take up to six months. Container traffic may reach 50 per cent of normal by July, and normalise by August. LNG carriers would be the last to normalise, with the window seen at around September.
War-risk premiums being paid by the ships, now up to 8 per cent of vessel value, will stay high until insurers see months of incident-free transits.