How much are Hormuz transit fees? Refiners gripped by ‘fear’

Hormuz transit fee: ‘$1 per barrel’

Gasoline·diesel could jump 11 won per liter

Iran already collecting fees from ships

Burden on Korean refiners estimated at 1 trillion won a year

Iran has been found to be imposing a transit fee of about $1 per barrel (about 1,520 won) on each oil tanker as a condition for passing through the Strait of Hormuz. Based on current import volumes, the amount Korea’s four refiners—SK Energy, GS Caltex, S-Oil and HD Hyundai Oilbank—would have to shoulder is estimated to exceed 1 trillion won a year. Analysts say refiners cannot pass all of the cost on to consumers, making it likely that both the refining industry and consumers will end up sharing the burden.

According to the refining industry and foreign media on the 2nd, Iran’s Islamic Revolutionary Guard Corps (IRGC) is already collecting transit fees from vessels passing through the strait. The IRGC first checks whether the vessel has any ties to hostile countries such as the United States. Bloomberg reported that ship operators seeking to sail through the strait must contact brokerages linked to the IRGC and submit information including the vessel’s ownership structure, shipment details, cargo manifest, destination, crew list and Automatic Identification System (AIS) data. The fee is then set depending on the vessel’s flag state and the degree of friendliness toward Iran.

The opening offer in negotiations is said to be about $1 per barrel, payable in yuan or stablecoins. Considering the 2 million-barrel capacity of a very large crude carrier (VLCC), this means at least $2 million (about 300 million won) is collected per ship. Korea imports about 700 million barrels of Middle Eastern crude a year via the Strait of Hormuz—equivalent to 350 tankers. That puts the annual transit-fee burden on Korea’s four refiners at roughly $700 million (about 1.0619 trillion won).

From refiners’ perspective, a “$1 per barrel” fee amounts to 1% of the cargo value carried by a VLCC and 11.1% of ocean freight. Using Dubai crude’s price of $105.12 per barrel that day, the crude on a single VLCC would be worth about $210.24 million (about 318.7 billion won). Current one-way freight for a VLCC departing the Strait of Hormuz and arriving in Korea is said to be around $18 million (about 27.2 billion won).

If the fee is collected, Middle Eastern crude brought in by Korean refiners is expected to rise by about 9.56 won per liter. Factoring in the premium added during refining, gasoline and diesel product prices are likely to be pushed up by around 11 won per liter. A significant portion of the added cost from the fee is expected to be absorbed by refiners, as the government has introduced a petroleum price-cap system to curb inflation.

There are also projections that fee negotiations themselves could be difficult for Korean vessels because Iran is demanding that parties have no connection to the United States. Of the four refiners’ total exports last year of $40.715 billion, $4.339 billion (about 10.7%) came from the U.S. Chevron of the United States holds a 50% stake in GS Caltex. S-Oil’s largest shareholder is Saudi Aramco, which has investment ties with the U.S. Saudi Aramco also holds a 17% stake in HD Hyundai Oilbank.

By Ahn Si-wook / Kim Dong-hyun