Iran's push to impose a fee system on the Strait of Hormuz could generate nearly $20 billion annually, but geopolitical and energy analysts say such astronomical tolls will never be accepted by the United States or Iran's Gulf neighbors. The strait is one of the world's most critical energy chokepoints, with roughly one-fifth of global daily oil consumption historically passing through it, giving any disruption outsized consequences for worldwide supply chains. The result is an ongoing stalemate that will either drag on indefinitely or end with Iran accepting a reduced—but still substantial—financial payout. Either way, the Middle East and global energy markets have been permanently altered.

"The strait is never going to go back to its pre-war status quo," said Gregory Brew, senior analyst for Iran and energy at the Eurasia Group. "There's going to be a permanently recognized Iranian role in managing the waterway. It's going to be jointly managed with Oman."

That does not mean Iran will get everything it wants. Tehran's demand for a 5% or 7% service fee per barrel of oil—effectively a mafia-style protection racket—amounts to "pure extortion," according to Bob McNally, former White House energy advisor under George W. Bush and founder of the Rapidan Energy Group.

Depending on oil prices and volumes, a 5% per-barrel fee would yield Iran an annual windfall ranging from $18 billion to $25 billion, while triggering inflationary cost increases worldwide. That figure accounts only for crude oil, excluding liquefied natural gas, petrochemicals, and other cargo transiting the strait—cargo that includes Qatar's massive LNG exports, which supply a significant share of global gas markets. Granting Iran fee-collection authority would also enable the regime to escalate at will—for instance, denying maritime access to any country hosting a U.S. military base.

"The toll is not just the financial cost itself; it's what else Iran does with that level of authority over who goes in and who goes out," McNally said.

Still, McNally told Fortune he does not believe Iran is genuinely determined to impose heavy tolls. "They know they won't be allowed to do that. They're holding onto tolls right now because they know that's the best leverage they have for the final deal, whenever it comes, with nukes and sanctions relief and everything."

The situation, he cautioned, is not straightforward. "Iran is not going to cede until it gets everything else it wants, and President Trump is unwilling to give that. Hence, we're in this prolonged stalemate so long as the oil market is drinking the Kool-Aid and believing everything's going to be fine, and crude oil prices stay below $100."

The global benchmark for oil futures was trading just below $90 per barrel late Tuesday—elevated, but well below the war's late-April peak of $124.

A tolling system is illegal under international maritime law, Brew noted, and insurance associations have warned that coverage would be terminated for vessels passing through any such framework. The United Nations Convention on the Law of the Sea guarantees transit passage through international straits like Hormuz, a principle that Iran's proposed fee structure would directly contradict. "Iran is conscious of the fact that if they squeeze the strait too hard, no one is going to want to use the strait, and its value—both as a strategic asset and as a potential source of revenue—is going to decline precipitously."

A Possible Compromise

Brew believes an eventual compromise could mirror the Strait of Malacca model, where a smaller, voluntary fee system exists for services and maintenance. Rather than a toll-booth arrangement, this could involve Iran's Gulf Cooperation Council (GCC) neighbors reluctantly making "voluntary" payments to Iran and, to a lesser degree, Oman for managing the waterway.

"An unattractive deal with Iran is the best of limited bad options," Brew said. "The Iranians won't accept a nominal, minor amount. They'll want something more substantial and the GCC will likely have to deliver them what they want. It also likely won't be entirely public. This may involve a degree of payments to Iran to ensure security in the strait, but which are not acknowledged publicly."

Eyeing Next Steps

Time pressure is mounting for the United States. November midterm elections are approaching, and this week the nation's Strategic Petroleum Reserve fell below 300 million barrels for the first time since January 1983.

Meanwhile, Iran's economy continues to deteriorate, though the hardliners in charge have demonstrated a willingness to endure prolonged downturns, said Dan Pickering, founder of Pickering Energy Partners.

"The U.S. is looking for an off ramp, but Iran doesn't want to give that off ramp," Pickering said. "Their demands have ratcheted up, while the U.S. is trying to ratchet down. You don't even hear a lot about the nuclear stuff right now."

Iran has rejected the latest U.S. offers, demanding a return to the June interim deal and additional concessions. President Trump is now focused on maintaining the U.S. blockade of Iranian oil to maximize financial pressure while avoiding military escalation, and on facilitating the movement of 5 million to 8 million barrels per day through the strait closer to Oman's side. That volume is significant, but far below the nearly 20 million barrels that once routinely transited the waterway daily.

Simultaneously, Saudi Arabia is routing more than 4 million barrels through the Red Sea—even when that means navigating around Africa to avoid Yemeni attacks—and China continues to purchase substantially less oil. These adjustments have kept prices from climbing further.

"But we can't do this indefinitely, and that's the Iranians' leverage. This is unsustainable," Pickering said. "Maybe it's like bankruptcy, gradually and then suddenly. But right now, we don't have a catalyst for a conclusion. The Iranians don't want one, and the U.S. isn't going to give up on the things that it cares about yet."

The situation may need to deteriorate further before improvement is possible, he added, noting that China is already beginning to slowly increase its imports.

Brew, of the Eurasia Group, is more optimistic about reaching an interim deal to reopen the Strait of Hormuz in the coming weeks, though he cautioned that any such agreement would be only a stopgap. A second phase of negotiations would address a Hormuz fee structure, nuclear discussions, and deeper sanctions relief.

"The Iranians see themselves as being in the stronger negotiating position," Brew said. "They're haggling, and they're negotiating with an eye to the next round of negotiations. So, none of these questions are going to be resolved in the near term."