The Strait Of Malacca Faces Growing Fears Of Copycat Shipping Fees

Global energy markets are turning their focus to the Strait of Malacca amid concern that the transit charges recently floated for the Strait of Hormuz could set a precedent that spreads to Southeast Asia's busiest shipping corridor.

The anxiety follows a sharp deterioration in Middle East security. Oil prices climbed after US President Donald Trump declared the Iran ceasefire over and pledged fresh strikes, while Iran reportedly targeted three commercial vessels near Oman's coast, drawing US retaliation. Tehran has again threatened to close Hormuz. Against this backdrop, Iran and Oman have proposed jointly administering Hormuz through fees on passing ships. Tehran treats the payments as compulsory, whereas Oman characterises them as optional service charges for navigation aid, search and rescue, and environmental protection, likening the arrangement to voluntary schemes already used in the Strait of Malacca. Reports suggest Iran could levy charges as high as US$2 million on oil tankers.

The worry, according to a CNBC report cited in the coverage, is that if such fees become normalised in the Gulf, littoral states around Malacca might be tempted to introduce similar levies. The 900-kilometre waterway, bordered by Indonesia, Malaysia and Thailand, handles more than 94,000 vessels a year and carries up to 30% of globally traded goods and close to half of the world's seaborne oil. At its narrowest, the Phillips Channel near Singapore is only 2.8 kilometres wide. Any blockage would force tankers on lengthy detours around Australia, adding 10 to 15 days and inflating fuel costs.

Analysts warn that a toll dispute in Malacca would raise tanker operating costs, squeeze trader and refiner margins, lift insurance premiums and add volatility to oil prices. China, dependent on the strait for up to 80% of its imported oil, faces the acute "Malacca Dilemma" and has pursued overland alternatives such as the China-Myanmar and China-Pakistan economic corridors, including the Kyaukpyu oil and gas pipeline.

For Malaysian and Southeast Asian maritime and oil and gas operators, the stakes are considerable. The three littoral states derive strategic and commercial weight from the corridor, and any move towards mandatory charges would test regional cooperation on freedom of navigation while directly affecting bunkering, transshipment and regional shipping economics.