The Strait of Hormuz Now Has Two Governments

On June 17, Iran signed a memorandum of understanding with Oman and the International Maritime Organization establishing a 60-day window during which no transit fees would be charged through the Strait of Hormuz. Thirteen days later, Iran's ambassador to China announced the opposite: "As a country where the Hormuz is part of its territorial waters, we will definitely charge service fees." ^[1] The sequence was not a diplomatic reversal. It was the mechanism of this war made visible in a single act. The pause was never an off-ramp. It was a construction window — time to build the fee infrastructure the agreement had just promised to suspend. Iran has used every pause this way. On May 25, during a lull in airstrikes, it launched the Persian Gulf Strait Authority, a regulatory body requiring IRGC security clearance for any vessel transiting the waterway. ^[2] The PGSA denied it collected "tolls," framing its charges as fees for environmental and navigational services — the institutional shell of a peacetime maritime authority, stood up while the bombs were still falling. By May 7, the PGSA was already operational: vessels were required to submit more than 40 data points for transit permits, the authority claimed regulatory jurisdiction over 8,800 square miles encroaching into Omani and UAE waters, and the IRGC warned that non-compliant ships would be considered "legitimate targets." ^[3] The formal launch in May was merely the institutionalization of a permit regime Iran had been running for weeks. As early as March 28, Iran was selectively granting safe passage to neutral states — Thailand, Malaysia, Indonesia, Pakistan — through bilateral deals that excluded American and Israeli-linked vessels. ^[4][5] The PGSA was always a political screening mechanism dressed as a safety regulation. Iran's deputy foreign minister made the framing explicit, arguing that Iran was merely exercising the same coastal-state authority Oman had enjoyed for decades when the Traffic Separation Scheme ran through Omani waters. ^[6] By late June, two explicitly rival maritime authorities were competing over the same waterway. On one side, the Oman-IMO corridor — US-backed, IMO-sanctioned, no transit fees. On the other, Iran's PGSA corridor — IRGC-enforced, fee-collecting, with Foreign Minister Araghchi declaring that responsibility for the strait "rests on the Islamic Republic of Iran. There is no other party or state in this respect." ^[7] The IRGC warned vessels against using the Omani route. By July 27, Iran's corridor had effectively won the routing competition: daily transits fell from 45 to 13, and high insurance premiums had crippled the US-backed alternative. ^[6] The United States built its mirror image on the same schedule. On April 29, Defense Secretary Hegseth declared that "no one sails from the Strait of Hormuz to anywhere in the world without the permission of the United States Navy." ^[8] The statement was not bluster — it was the founding charter of a rival permit regime that structurally mirrored Iran's, right down to the claim of sovereign discretion over who passes. On July 24, the US convened a London summit to build a formal naval coalition — the "Hormuz Coalition" — seeking vessels, drones, and de-mining ships from allies, institutionalizing its blockade as a permanent multinational maritime authority. ^[9] Then, on July 28, the US imposed what it called a "steel wall" blockade, sanctioning two specific entities: the Persian Gulf Marine Insurance Company and HormuzSafe Marine Services Authority. ^[10] These were not Iranian oil companies or weapons suppliers. They were the exact financial instruments Iran had built during the pauses to monetize its PGSA permit regime — the insurance entity positioned to fill the market gap left by war-risk premiums that had surged 1,000 percent, a gap India had already tried to patch with a $1.8 billion emergency fund in April. ^[11][10] The July 28 sanctions mark the transition. This is no longer a war of airstrikes. It is a competition between two permanent maritime governance regimes, each with its own permits, its own enforcement, its own financial architecture, and its own coalition of allies. Neither side pretends the current pause is an off-ramp. Trump said on July 24 that "we're not finished at all" and "we're not leaving right now." Iran's foreign ministry spokesman Baghaei said "what exists cannot be described as a ceasefire." ^[9] Both statements are accurate. The pause covers airstrikes, not maritime interdiction — even during the July 25 halt, the US continued enforcing its blockade, disabling the tanker M/T Lavine. ^[12] The governance competition runs on a separate track from the bombing, and neither side has any intention of merging them. Congress has tried and failed nine times to pass a war powers resolution limiting the president's authority over the Iran conflict, most recently a 48-47 vote on June 16. ^[13] No domestic constraint has worked so far, and the blockade — the austerity version of the war, adopted after Trump's advisers warned the military was depleting its arsenal and running out of targets — faces no effective check. ^[14][10] The template has already escaped its origin waterway. On July 21, Houthi rebels backed by Iran announced a naval blockade of the Bab al-Mandeb strait, applying the same chokepoint-control strategy at a second strategic waterway. ^[15] By July 28, Saudi Arabia — which had been rerouting up to 7 million barrels per day through the Red Sea to escape Hormuz — found itself caught between two blockaded chokepoints. ^[16] Secretary Rubio had warned in June that Iran's fee model would spread "like a contagion." ^[1] It has. On July 29, S&P Global reported traffic through the Strait of Hormuz as "stable" at roughly 15 transits per day — a fraction of the pre-war average — while Iranian crude on tankers surged from 30 million to 47 million barrels. ^[17] The depressed volume is not a disruption awaiting resolution. It is the equilibrium of two rival authorities each enforcing their regime over the same waterway, and the traffic data has stopped falling.