The Wall Street Journal reports:

In just six weeks, the Iran War has shattered a system of global trade that has enriched people and nations for more than a century: the freedom to sail the open seas.

The Strait of Hormuz long functioned as an artery for the world’s maritime economy. But that 30-mile-wide waterway is now a monument to a new global disorder. As some 20,000 sailors effectively held hostage at sea digested President Trump’s cease-fire announcement this week—contingent on the complete opening of the strait—Iranian officials stressed they would determine which ships could leave and at what price.

The “Tehran toll booth” was taking effect, as the U.S. Navy watched on, an admission that, at least here and now in the world’s oil corridor, America no longer rules the waves.

Captains, owners and managers of the more than 700 vessels stuck near Iran, carrying tens of billions of dollars in cargo, were messaging one another to try to make sense of Tehran’s shifting rules. After days of drones and missiles flying overhead, Iran’s navy broadcast a radio message clarifying their position: “If any vessel tries to transit without permission, [it] will be destroyed.”

The Strait of Hormuz, sailors said, risks becoming a graveyard for a trading system so integral to the modern economy that most consumers, accustomed to cheap imports and three-day shipping, take it for granted. The price stands to be shouldered by consumers across the world, in inflation, scrambled delivery schedules and the snarls of a new arrangement in which Tehran can choose which countries access Middle Eastern oil.

If Iran continues to charge tankers for safe passage, the added cost will hardwire a higher price for a gallon of gasoline, economists said. Or its Revolutionary Guard Corps could choke the flow entirely, wreaking havoc on energy markets. Either way, shipowners, their insurers and crew remain wary of sailing back into a once-bustling strait that could spring like a trap on the slightest misunderstanding between an aggrieved Iranian regime and an American president who threatened to wipe out its entire civilization in a single night.

Whatever happens next, the precedent of a toll booth in open waters will reverberate across a world order the U.S. helped build. America’s allies worry other players could try to replicate Iran’s example, like empires of the 17th century, when China’s Qing dynasty, the Ottomans and Portuguese taxed passing vessels. Trump has floated his own wish for an American toll on the Persian Gulf, and his expenditure of naval power in the Middle East has given Beijing and its navy—the world’s largest—freer rein to expand control over the South China Sea.

The ripple effects extend to the U.S. dollar, whose standing as the unquestioned currency of seaborne trade helps America keep taxes low and deficits high. Iran, sailors noted, is collecting tolls in Chinese yuan or cryptocurrency. [Continue reading…]