The Cartaz Remix: The Hormuz Gambit and the Emergent Montreux of the Gulf

The Neo-Medieval Siege and Colliding Global Stacks

The events following the 28 February 2026 attack on Iran have dragged the times back to a medieval world of distrustful warring fortresses, governed by overlords restrained by no rules save the raw brutality of the siege. Ironically, the history of Hormuz itself illustrates how power had repeatedly been exercised through recorded maritime history. Long before the word ‘globalisation’ was invented by the West, the Strait of Hormuz had been for centuries the artery of a trading network of dhows (traditional sailing vessels) from Gujarat and the Malabar Coast sailing the Persian Gulf.^[1] They traded not because any multilateral rulebook permitted them, but because geography, and enterprise, driven by common every day civilisational necessities demanded it. The trade peaked from the 13th to 15th centuries until Afonso de Albuquerque trained his guns upon Hormuz in 1507 and invented the Portuguese cartaz (licence).^[a],[2]

The Estado da India was built not on the conquest of vast territories, but of the chokepoints of this trade—Hormuz, Malacca, Goa, and Aden.^[3] The enforcement of cartaz was explicit, systematic, and brutal; it became the prototype of coercive maritime governance. Today, the geopolitics of the twenty-first century appear to have reverted to this structural reality with a ferocity that would have been the delight of medieval colonialists.

Current events in the Persian Gulf represent a collision between two organising pillars of global interdependence developed in the decaying modern world: the physical geographical chokepoint of the Hormuz Strait challenges the virtual technology-enabled chokepoints operationalised through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and sanctions. The irony is instructive. It was the wardens of the virtual commons who were the first to weaponise the open-to-all technological infrastructure vested in the safe-custody of their financial institutions, turning it into an instrument of economic coercion.^[4] On 15 March 2012, SWIFT announced that it had been instructed to discontinue its interbank messaging services to Iranian banks that were under sanctions.^[5] Excluding a nation from SWIFT not only freezes its ability to trade globally but amounts to a virtual siege, sentencing its population to economic starvation.^[6]

Fourteen years later, Iran responded using geography. The closure of Hormuz following the attacks launched by the United States (US) and Israel on 28 February 2026 choked global supplies of not just energy, but fertiliser, helium, aluminium, and all seaborne trade through the Strait. The shock instantly sent oil markets into hysterical volatility. Both actions, one in the virtual and the other in the real world, mirrored each other as blatant economic coercion: both designed to inflict civilian suffering and both deploying the architecture of interdependence as a weapon. The US called its instrument “sanctions enforcement” and Iran, “self-defence”—neither was wrong or right, and that became the problem.

The casuistry of the cartaz of sanctions had in effect become difficult to sustain after April 2023, once the US Department of Justice confirmed the seizure of the Suez Rajan, a Greek-managed tanker carrying 980,000 barrels of Iranian crude oil supposedly destined for China.^[7] The vessel was seized under sanctions enforcement powers while transiting international waters that had no connection to US territory beyond the use of US correspondent banking. Iran’s response was deliberate and calculated: in January 2024, the Iranian Navy, also acting under a court order, seized the very same vessel—rechristened St Nikolas—in the Sea of Oman, as retaliation for US “oil theft.”^[8] The message was not lost on the world. The virtual cartaz had found its physical twin. If the United States could seize Iranian cargo on the high seas under the authority of its domestic sanctions law, Iran could capture American-linked cargo under the authority of its own legal system. A tit-for-tat operation had made the global rules-bazaar optional for all.

The move on Hormuz was not sudden. Iran’s Hormuz Peace Endeavor (HOPE), first announced by President Hassan Rouhani at the 74th UN General Assembly in September 2019, had been presented not as a gesture of goodwill^[9]  but as a structural claim: that responsibility for Persian Gulf security belonged exclusively to its littoral states, and that non-regional navies (i.e., the US Fifth Fleet), had no legitimate permanent presence in the Gulf. HOPE’s six pillars—Dialogue and Mutual Understanding, Confidence Building Measures, Energy Security, Freedom of Navigation (on Iranian terms), Non-Aggression, and Non-Intervention—were in effect the blueprint for the maritime sovereign order Iran intended to operate. The cartaz of the twenty-first century was already being embedded in a diplomatic initiative whose operational meaning became clear only when the missiles started flying on 28 February.

The Architecture of Conflict: Transit Passage, Innocent Passage, and the Copenhagen Paradox

To understand why the Hormuz crisis cannot be resolved by legal argument alone, a reading of the legal frameworks that makes every ship transit a potential casus belli is helpful. The two sides are not arguing about facts but operating from entirely different rulebooks, both of which have formal legal sanction.

The United States enforces the transit passage provisions of the United Nations Convention on the Law of the Sea (UNCLOS)-Part III, Articles 37 through 44, as binding customary international law applicable to all nations regardless of whether or not they have ratified the Convention.^[10] Under transit passage, warships may transit in ‘normal mode’—submarines submerged, aircraft overflying, radar systems active—and the coastal state has no right to suspend or impede passage. The operating doctrine of the US Fifth Fleet in the Strait of Hormuz and international waters is built on this framework.

Iran rejects this framework and instead relies on the 1958 Geneva Convention on the Territorial Sea and the Contiguous Zone, which applies the doctrine of “innocent passage”. Under this principle, a coastal state may suspend transit if it deems a vessel’s passage “prejudicial to its peace, good order, or security.”^[11] Crucially, “innocent passage” requires submarines to surface and fly their flags, prohibits military aircraft overflight, and allows the coastal state to stop and inspect vessels it deems threatening. The United States and Iran are therefore engaged in legally irreconcilable conduct every time a US warship transits the Strait. The conflict mirrors this legal duality. While the international community relies on the Corfu Channel Case^[12] and the San Remo Manual^[13] to demand that Iran keep the shipping lanes open for neutral commercial tankers, those same laws strip the US, Israel, and any co-belligerent, of innocent passage rights.^[14]

The practical consequences are confounding. A US submarine transiting Hormuz while submerged is exercising a legal right under the UNCLOS principle of transit passage. Under Iran’s framework, it is committing an illegal act of intrusion that Iran may respond to with force. A US carrier strike group maintaining active radar is exercising normal defensive readiness under UNCLOS; under the 1958 framework, it is conducting intelligence-gathering that forfeits the right of innocent passage. Both sides are simultaneously breaking each other’s laws while obeying their own.

A further irony compounding the legal chaos is rooted in the very precedent that Western maritime powers invoke most proudly: The Copenhagen Convention of 1857 (which established the modern principle that strategic straits cannot be owned by coastal states and taxed or closed at will), is itself recognised as an exception to UNCLOS under Article 35(c).^[15] That Convention abolished Denmark’s 428-year-old Sound Dues, a toll levied since King Eric of Pomerania introduced it in 1429, and enforced by cannons on any vessel that refused to stop at Helsingør. Copenhagen received a compensation, to which Britain and Russia each contributed approximately one-third.^[16] The United States declined to join the multilateral convention and instead chose to sign a separate bilateral treaty, paying for perpetual free passage. Thus, while on one hand, the 1857 Convention codified the principle that straits cannot be closed or taxed at will, on the other, by placing the 1857 Convention under the Article 35 exception, UNCLOS explicitly acknowledged that all international straits were not necessarily governed by the exact same rules.

UNCLOS Article 35(c) states that its general transit passage rules do not apply to straits regulated by “long-standing international conventions in force specifically relating to such straits.” The Danish Straits, as a result, remain governed by their 1857 regime rather than UNCLOS. Iran’s argument is that it is not bound by the newer UNCLOS framework and therefore has considerably more legal foundation than Western maritime powers are prepared to admit in public. Customary international law is not a gift of reason to humanity; it is precedent codified by whoever held the power at the time. The powerful party wrote the rule, and the rule outlasted the power that created it. The implicit or explicit force that made this possible was certainly never a triumph of principle or of law. The 1857 Copenhagen Convention was demonstrating this sequence.

In Hormuz, the co-belligerent trap adds a final, legally consequential layer of complexity. Under the Hague Conventions, a state that allows its territory to be used for the transit of troops, munitions, or as a base of operations against another forfeits its neutral status.^[17] Qatar’s Al Udeid Air Base, Bahrain’s Fifth Fleet headquarters, and Kuwait’s Camp Arifjan are thus arguably co-belligerents in any US-Iran conflict. Iran uses this as a basis for declaring naval blockades against their ports and stopping vessels destined for them, while maintaining that it has not blocked neutral commerce. The difficulty of enforcing this distinction in the narrow waters of the Strait is a different matter altogether; but the legal architecture exists.

The Sound Dues precedent is best understood not as a legal landmark but as a case study in power translation. Denmark had levied tolls on the Øresund since 1429, extracting payment from every vessel passing between the North Sea and the Baltic. At their height the 16th and 17th centuries, the Dues constituted nearly two-thirds of the Danish state’s income, declining to one-eighth before they were abolished in 1857. Notably, even when the dominant maritime coalition of Britain, Russia, and a rising US had accumulated sufficient force to end the arrangement, they did not attempt to argue Denmark out of it. Instead, they paid Copenhagen to codify their preferred rules. The US$393,000 the United States paid separately was the price it was willing to bear for authoring a precedent that would serve American naval interests across every ocean for the succeeding two centuries. For decades before their abolition, the Sound Dues were “illegal” by the emerging standards of those who held the power to abolish them.

Iran must be reading this history with attention. The question it is asking today is not whether its Hormuz rules are just, but whether those who argue otherwise still hold the power to enforce their diktat. More importantly, Iran is advancing what may be called a mirror legal framework. Rather than argue within Western maritime law, it is treating US sanctions as a prior act of war. UN General Assembly Resolutions 78/135 (2023) and 79/167 (2024) explicitly condemn “unilateral coercive measures” as violations of human rights and international law. Although Western governments may choose to dismiss these resolutions as non-binding, they nonetheless frame dollar sanctions as a form of economic warfare. When such sanctions deprive civilians in Iran, Afghanistan, or Syria of medicine, food, and other essential goods, sanctioning states invite the charge of aggression. On that basis, Iran argues that restricting traffic through the Strait is a lawful countermeasure rather than a provocation. This argument is no longer frivolous; it has gained traction across parts of the Global South,^[18] where many view the use of SWIFT against Russia, Iran, and Venezuela (but not against Israel over Gaza and Lebanon) as evidence that the so-called rules-based order is applied selectively by the wealthy against the poor.

The Blind Spots of International Energy Planning

Hormuz has exposed the structural weaknesses of energy planning across the world.  Import-dependent nations, lulled by the mantra of free-markets, had allowed obvious physical chokepoints to morph into strategic blind spots. Post-1945, the illusion of a singular rulebook had been carefully maintained. In truth, there was no rulebook, and what existed were only competing legal frameworks designed to balance asymmetric interests as in the UNCLOS-Vs-Geneva collision. This willing blindness got exacerbated by hyper-financialised spot markets built on the flawed, peacetime assumption of perpetual global surplus based on free maritime passage.^[19] Hormuz reminded the world that when physical deliveries become non-existent, the spot market vaporises, exposing nations to hyper-inflationary volatility. No derivative instrument, however sophisticated, can substitute for an actual barrel of crude transiting the strait.^[20]

For importing countries on the receiving end, the scare is that alternative sourcing and routing strategies either are logistical challenges or merely transfer vulnerability. The Northern Sea Route is a physical impossibility for large-scale substitution. It is prone to extreme seasonality, ice-class vessel constraints, and voyage economics that render it commercially marginal for sustained bulk energy transit.^[21],[22] The Cape of Good Hope route, elevated to global significance after Houthi attacks forced the closure of the Bab-el-Mandeb corridor, demonstrates the same structural vulnerability from a different direction: a 50-day voyage from the Gulf to Europe, with insurance premiums in the stratosphere, is no alternative to a freely transiting strait.

With Qatar hit, demand for liquefied natural gas (LNG) only forces buyers into the virtual cartaz of Western finance. They are tied to domestic US price spikes, Henry Hub volatility, plus a 50-day freight premium on Cape route shipping. The energy consumer, regardless of the pathway chosen, is only trading one form of dependency for another. Absent is any shock absorber that can contain the fallout of a permanent Hormuz closure. Everything downstream of that corridor—from Tokyo’s factory floors to Taiwan’s semiconductor fabs to the wheels that move a billion Indians—have thus been operating on the tacit assumption that the passage is ordained to remain open.

Türkiye as the Indispensable Spoiler: A Montreux Masterclass

To understand where the Hormuz crisis is going to end, one probably needs to see where Türkiye’s Montreux gambit began and where it now stands. The mechanics of the Montreux Convention also worked because they rejected legal idealism for raw realism.^[23] Türkiye did not merely “get the keys” to the Bosphorus in 1936; it demonstrated a strategic template that Iran is now attempting to replicate, one in which a geographically pivotal state converts its physical position into permanent immunity from the consequences of great-power rivalry.

As the League of Nations’ security architecture collapsed, Türkiye sought to revise the 1923 Lausanne treaty^[b] to remilitarise the Bosphorus and Dardanelles. Ankara faced genuine existential threats: Mussolini was fortifying the Dodecanese Islands across Türkiye’s southern approaches, and Hitler’s March 1936 remilitarisation of the Rhineland proved that rules-based treaty compliance was dead. Atatürk’s genius lay in weaponising Europe’s geographic anxiety into diplomatic leverage. He issued an ultimatum: grant Türkiye legal control over the Straits, or Ankara would fortify them unilaterally, forcing a vital strategic player into the orbit of Berlin or Rome. The resulting 1936 accord was a masterclass in compromise, dissatisfying every power just enough to stabilise the Black Sea on the eve of the Second World War. Britain and France secured Türkiye’s alignment away from the Axis powers,^[24] the Soviet Union gained a defensive buffer by restricting non-regional naval access,^[25] Türkiye got the keys and successfully restored full sovereign militarised control over its straits.

The war in Ukraine has only demonstrated the Convention’s power. On 28 February 28, Türkiye invoked Article 19 to officially recognise Russia’s invasion of Ukraine as a state of war and declared the Straits closed to warships of all belligerent parties.^[26] Russia’s powerful cruisers—stranded in the Mediterranean, legally unable to reinforce a Black Sea Fleet being methodically destroyed by Ukrainian maritime drones—became a wasted asset. The Moskva, flagship of the Black Sea Fleet, struck by two Ukrainian Neptune missiles and sunk in April 2022, could not be replaced. Every ship Ukraine sank was a permanent loss for the duration of the conflict. Russia was reduced to hauling small corvettes through the Volga-Don canal, too slight to carry the heavy missile systems needed to dominate the theatre. In January 2024, Türkiye denied passage to British Sandown-class minehunters donated to Ukraine,^[27] ruling that even defensive mine-countermeasure vessels constitute ‘warships’ under the Convention. The Black Sea had literally become a Turkish lake.

Türkiye’s more consequential strategic play, however, unfolded in energy rather than naval affairs. The Ukrainian gas transit route’s closure on 1 January 2025—with Kyiv allowing the Gazprom-Naftogaz transit agreement to lapse without renewal—elevated Türkiye from a gas transit country to something considerably more profitable: a gas hub. With Türkiye simultaneously importing from Russia via Blue Stream, from Azerbaijan via TANAP, and from Iran,^[28] the BOTAŞ national grid receives molecules from multiple origins. Once commingled inside the Turkish grid, those molecules lose any national provenance. What exits at the Bulgarian and Greek borders is ‘Turkish Gas’—a designation that allows Hungary, Serbia, and Slovakia to continue consuming Russian molecules while technically complying with EU diversification mandates. With Russian gas flowing through TurkStream recording the highest volumes since the pipeline’s launch,^[29] the EU moved finally to try and ban Russian gas in phases. Regulation now required that all gas entering from Türkiye would be presumed of Russian origin unless Turkish authorities certified otherwise^[30]—a measure that simultaneously acknowledges the mechanism and reveals Brussels’ impotence in closing it.

The energy hostage and the naval kill-switch operate in concert, converting geography into permanent leverage over the North Atlantic Treaty Organization (NATO), the European Union (EU), and Russia alike. US approval of F-16 modernisation kits for Türkiye’s air force is not a reward for democratic values but a retainer fee—a cartaz paid to the geopolitical landlord who controls the most strategically valuable real estate in Europe.  It is another fortress model Iran must have examined with all diligence due.

The Impending Montreux of the Gulf

The proliferation of cheap, highly advanced asymmetric warfare capabilities—anti-ship ballistic missiles (ASBMs), explosive loitering munitions, and unmanned underwater vehicles (UUVs)—has fundamentally disrupted traditional blue-water naval power projection. For the United States, which had built its global military strategy around massive, capital-intensive carrier strike groups, this shift has already created severe operational vulnerabilities, particularly in narrow maritime chokepoints such as Bab-el-Mandab and Hormuz.

As became obvious with every passing week since 28 February, Iran’s ‘Hormuz gambit’ could no longer be resolved by the American Fifth Fleet attempting to enforce freedom of navigation mandates that were sounding anachronistic in the Fortress World of the 21st century.^[31] The structural reality on the ground—two legal systems in permanent collision, a global energy system that could not function without the strait, and a middle-power coalition increasingly unwilling to absorb the costs of American maritime hegemony—all pointed in the same direction. The Strait of Hormuz will not return to the post-1945 illusion of a demilitarised, frictionless multilateral commons. Geopolitical physics dictates a more realist resolution.

Iran’s play is, in its essential architecture, a ‘Montreux-isation’ of Hormuz. It has proceeded in three phases. The first was the creation of a prohibitively ‘uninsurable’ environment: by maintaining sufficient threat through drone swarms, naval harassment, and the selective seizure of tankers, Iran made ‘free passage’ economically fictional. The Lloyd’s of London’s Joint War Committee’s war-risk designations, not Iranian naval orders, then performed the work of a blockade far more effective than the US tried to counter using its fleet.^[32] Iran now does not need to even fire a single shot to achieve the de-facto exclusion it seeks; it only has to maintain enough menace and let the insurance markets do the rest.

The second phase could now be the construction of a Permitted List: bilateral arrangements with sympathetic nations that guarantee safety of passage in exchange for quiet acknowledgment of Iranian regulatory authority. China has vetoed UN Security Council resolutions condemning Iranian maritime actions, and even when it abstained it argued that the proposed resolutions were unbalanced and failed to address the root causes of the conflict.^[33] India, for its part, has deployed destroyers to escort its own vessels while declining to join any US-led coalition, tacitly accepting the partition of maritime governance. Saudi Arabia, meanwhile, has signed a US$7-billion currency swap with China,^[34] quietly loosening the petrodollar tie that once made American protection seem worth its price.

It is difficult to predict when, but the third phase seems to be inching towards exhaustion and capitulation as a ceasefire that was no ceasefire, yet kept getting a new lease, finally concluded in a much hyped “deal” that in effect was little more than a framework to negotiate further. The three parties to the conflict are expected to continue testing each other’s resolve indefinitely during this process. Eventually, just as Europe yielded to Ankara in 1936 not from legal conviction but from the sheer unsustainability of managing a security crisis without Turkish cooperation, the global order could find itself unable to sustain the economic cost of an unmanaged, unpredictable siege in Hormuz.

What could be a proposed framework for such a Hormuz Convention? For Iran it would mirror its HOPE initiative, pushed considerably further.^[35] Grant Iran and Oman, and maybe other regional powers too, should they agree to a security architecture independent of the United States, joint regulatory authority through a ‘Hormuz Maritime Authority’. Replace UNCLOS transit passage with the 1958 innocent passage framework, requiring advance notification for warship transit, and effectively ban the nuclear-powered ships that constitute the backbone of the US Fifth Fleet. In exchange, commercial traffic would be guaranteed predictable passage on terms that Iran will define and potentially tax, just as Denmark taxed the Øresund for four centuries before a coalition of maritime powers mustered the strength to say no.

Oman’s role is one of the pivots on which this entire construction rests.^[36] Unlike the Bosphorus, which lies entirely in Turkish territorial waters, the Strait of Hormuz is shared between Iran and Oman—its southern shore, including the Musandam Peninsula exclave, is Omani. Any ‘Hormuz Lake’ strategy that lacks Omani participation will be legally incomplete. Oman has historically maintained a studied independence from Tehran’s embrace, underwritten by British and American security guarantees. Yet to treat this posture as permanent may be to misread the lessons Muscat and other regional actors have drawn from a decade of escalating regional crises in which they have often been cast as hapless negotiators between parties who can only talk at (never to) each other. They need third parties.

The mechanism of Oman’s and the region’s recalibration may be neither sudden nor ideological, but the cumulative mathematics of disillusionment. Muscat must have watched the US-Israel combine launch wars across the region—wars whose costs fell entirely on its neighbours, even as the security guarantors who demanded Omani loyalty absorbed none of the consequences. The back-channel negotiations Oman hosted between Washington and Tehran—services Muscat provided precisely because of its studied neutrality—produced no durable settlement; the Americans walked away, sanctions were tightened, and the missiles multiplied.

For many a small state positioned astride the world’s most contested waterway, the calculus may have shifted decisively: Western security architecture delivered diminishing returns while their entanglements multiplied. Oman’s and Qatar’s historical tradition of pragmatic neutrality may, paradoxically, be the quality that makes them most susceptible to Iran’s arguments for a new regional security architecture. A posture of cooperative strait management, shared with the other littoral state and insulated from great-power rivalry, could be a natural extension.

The broader reaction of the ‘middle powers’ is, in geopolitical terms, the most consequential development of all. Türkiye, Indonesia, India, Saudi Arabia, and South Africa are not unified by ideology; they are unified by a single strategic calculation: when does the era of paying tribute to the American security subscription while absorbing the consequences of American geopolitical choices become economically and politically untenable?^[37] Saudi Arabia’s currency hedging, Indonesia’s refusal to lift nickel export bans despite US pressure, India’s deployment of naval escorts for its own vessels, Türkiye’s gas brokerage operations—these are not random acts of defiance. They are the tacit expressions of an emergent ‘cartel of the non-aligned’ whose winning condition is a world where they can trade with China, buy weapons from Russia, and sell to the United States without asking permission from any of them.

The ‘Donroe Doctrine’—the fusion of the Monroe Doctrine’s^[c] sphere-of-influence logic with contemporary American transactionalism—simultaneously hands Iran its most powerful legal argument and resolves a glaring internal contradiction: if Washington has retreated to ‘Fortress America,’ treating the Eastern Hemisphere as a marketplace rather than a protectorate, why would it put ships at risk to enforce a freedom of navigation mandate that benefits Asian energy consumers rather than American ones? The obvious answer is that it should not, and indeed, as already stated far too often by America now, eventually, it will not. A transactional America should have no rational incentive to maintain the Fifth Fleet as a perpetual public good for Taiwan, India, Japan, China, and South Korea. The logical conclusion of the Donroe Doctrine is not hostility towards a Hormuz regulatory authority; it is quiet acquiescence in one that compels import-dependent Asian nations to negotiate their own transit arrangements and bear their own security costs. Iran’s response—If you don’t want China in the Caribbean, why should we want the US in the Persian Gulf?—has a structural coherence the architects of the original Monroe Doctrine would recognise; and its transactional successor would add: If Asian nations want their molecules, let them pay for the passage. The consequence could be the emergence of an Indo-Pacific arc of dependence, a coalition of Hormuz-reliant import economies whose shared vulnerability compels a new regional energy security architecture.^[d]

While a formal diplomatic convention may not be agreed to soon enough—certainly not in the 60 days following the “Deal” to negotiate, signed between the presidents of Iran and the United States—the power shift instigated by Iran’s defiance may well pass into de-facto practice well before it crystallises into de-jure convention. Energy-dependent nations will accept almost any terms of passage—including Iran’s right to regulate and tax transits—as long as those terms guarantee access to the oil and gas molecules their economies cannot survive without.

Eventually, this operational reality will pass from de-facto practice to established convention. The global order will sacrifice its ideological claims to an open sea to save itself from absolute darkness. In doing so, it will formally codify the geographic reality on the ground, handing the sovereign keys of the strait directly to Iran and Oman. An arrangement that may well continue until such time that the world eventually returns to negotiating new norms for interdependency across both the physical and virtual spheres of influence. Some in the United States and Israel may sulk in the wake of this transformed global reality, but the oil will flow once again, at least for now.

Conclusion

What does this all mean for any new emergent global order? The first shift requires abandoning the illusion that sovereignty is a universal right that can be guaranteed by any multilateral rulebook. The ‘Hormuz gambit’ has demonstrated that customary international law was never a gift of reason to humanity; it was a precedent codified by whoever held the power at the time. In a fortress world, sovereignty is no longer granted; it is negotiated purely on the basis of leverage.

Just as the 1857 Sound Dues ended only when a coalition paid Copenhagen to codify its preferred rules, and just as Türkiye’s 1936 Montreux gambit turned geographic anxiety into lasting diplomatic leverage, Iran has asserted a new paradigm. It has shown that a physical chokepoint can neutralise a virtual financial blockade: sovereignty now belongs to the state that can make denial of its waters prohibitively costly for its adversaries. Through the siege, Iran has tested a new balance of power, and Washington’s sudden pivot at the recent G7 summit^[e] validates that reality. The United States did not yield to legal arguments at the UN but it did so to the economic gravity of the physical siege.

The lesson is stark: the rules-based order is no longer enforced solely by American hegemony, but increasingly by a state’s capacity to inflict or withstand economic pain. This mutual capitulation is the modern equivalent of Montreux. It shows that custodians of the virtual order can no longer weaponise finance without risking catastrophic geographic retaliation. Ultimately, the global order must sacrifice ideological dogma to avoid systemic breakdown. By trading sanctions relief for the reopening of the Strait, the world is moving from the raw brutality of fortress siegecraft towards a negotiated interdependence that recognises and balances the hard realities of both physical geography and virtual finance.

What will eventually emerge is a new form of negotiated interdependence. The neo-medieval siege cannot be the permanent endgame as an absolute blockade would be economically unsustainable for all actors. As the costs of the Hormuz crisis force the system to adapt, a more stable rules-based order is slowly taking shape, driven by the pragmatic calculations of great powers and an emergent “cartel of the non-aligned.” Rather than import-dependent nations simply accepting Iranian regulatory taxation while the United States retreats to the margins, the more pragmatic outcome is a negotiated disarmament of competing cartazes. If and whenever the G7 framework for a 60-day final settlement succeeds—placing the United States on a path to remove its financial blockade and sanctions in exchange for Iran keeping the Strait open—it may well become the first codification of this new era.

Additional References

Primary Sources and Legal Instruments

Convention on the Territorial Sea and the Contiguous Zone. Geneva, April 29, 1958. 516 U.N.T.S. 205.

United Nations General Assembly. Resolution 78/135, “Unilateral Economic Measures as a Means of Political and Economic Coercion against Developing Countries.” December 19, 2023.

United Nations General Assembly. Resolution 79/167. 2024. 

Books

Robin R. Churchill and A. V. Lowe, The Law of the Sea, (Manchester: Manchester University Press, 1999).

William Hale, Turkish Foreign Policy, 1774–2000 (London: Frank Cass, 2000).

Philip K. Verleger, Adjusting to Volatile Energy Prices (Washington, DC: Institute for International Economics, 1993).

Journal Articles and Book Chapters

Harry N. Howard, “The Straits After the Montreux Conference,” Foreign Affairs 15, no. 1 (October 1936): 199–202.

Reports, Press Releases, and Online Sources

Adam Aliana and Russell Spivak, “The Montreux Convention and Turkey’s Impact on Black Sea Operations,” Lieber Institute at West Point, April 25, 2022, https://lieber.westpoint.edu/montreux-convention-turkeys-impact-black-sea-operations/.

“Europe Targets TurkStream: Greece Drives Shift Away from Russian Gas,” Greek City Times, October 22, 2025.

“Russian Gas Flows to Europe Via TurkStream Remain at Sustained High,” S&P Global, February 2, 2026, https://www.spglobal.com/energy/en/news-research/latest-news/natural-gas/020226-russian-gas-flows-to-europe-via-turkstream-remain-at-sustained-high-in-jan.

“Russian Gas Imports: Council Gives Final Green Light to a Stepwise Ban,” Council of the European Union, Press Release, January 26, 2026, https://www.consilium.europa.eu/en/press/press-releases/2026/01/26/russian-gas-imports-council-gives-final-greenlight-to-a-stepwise-ban/.

Sunjoy Joshi is Chairman, Observer Research Foundation.

All views expressed in this publication are solely those of the author, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.

Acknowledgement

The author acknowledges the use of Gemini 3.1 Pro and Claude Sonnet 4.6 for preliminary literature survey and to create a draft outline for this paper.

Endnotes

^[a] A naval trade licensing system implemented by the Portuguese Empire to monopolise maritime commerce in the Indian Ocean. The pass protected merchant vessels from being attacked or captured by the Portuguese navy. See: K. N. Chaudhuri, Trade and Civilisation in the Indian Ocean: An Economic History from the Rise of Islam to 1750 (Cambridge: Cambridge University Press, 1985), 14–20.

^[b] The 1923 Treaty of Lausanne officially settled the conflict between the Ottoman Empire and the Allied Powers following the First World War.

^[c] The US National Security Strategy has often been dubbed “the Monroe Doctrine with a Trump corollary.” See: https://www.whitehouse.gov/wp-content/uploads/2025/12/2025-National-Security-Strategy.pdf.

^[d] This is the subject of a separate, followup paper on energy security by this author.

^[e] Just hours before signing the 14-point MOU with Iran, President Trump had been threatening to resume bombing Iran. See: https://www.reuters.com/world/middle-east/trump-says-iran-memorandum-understanding-is-not-final-2026-06-17/

^[1] K. N. Chaudhuri, Trade and Civilisation in the Indian Ocean: An Economic History from the Rise of Islam to 1750 (Cambridge: Cambridge University Press, 1985), 14–20.

^[2]Sanjay Subrahmanyam, The Portuguese Empire in Asia, 1500–1700: A Political and Economic History (Chichester: Wiley-Blackwell, 2012), 62–85.

^[3]C. R. Boxer, The Portuguese Seaborne Empire, 1415–1825 (London: Hutchinson, 1969), 45–52; Michael Pearson, The Indian Ocean (London: Routledge, 2003), 112–116.

^[4]Henry Farrell and Abraham Newman, “Weaponized Interdependence: How Global Economic Networks Shape State Coercion,” International Security 44, no. 1 (2019): 42–79, https://direct.mit.edu/isec/article/44/1/42/12237/Weaponized-Interdependence-How-Global-Economic.

^[5] “Swift Instructed to Disconnect Sanctioned Iranian Banks Following EU Council Decision,” Press Release swift.com/ March 12, 2012, https://www.swift.com/insights/press-releases/swift-instructed-to-disconnect-sanctioned-iranian-banks-following-eu-council-decision.

^[6]Hossein Askari, John Forrer, Hildy Teegen, and Jiawen Yang, Economic Sanctions: Examining Their Philosophy and Efficacy (Westport, CT: Praeger, 2003), 33–57; Juan Zarate, Treasury’s War: The Unleashing of a New Era of Financial Warfare (New York: PublicAffairs, 2013), 1–30.

^[7] US Department of Justice, “Justice Department Announces First Criminal Resolution Involving the Illicit Sale and Transport of Iranian Oil in Violation of U.S. Sanctions,” September 8, 2023, https://www.justice.gov/archives/opa/pr/justice-department-announces-first-criminal-resolution-involving-illicit-sale-and-transport.

^[8]Charles Kennedy, “Iran Seizes U.S. Oil Tanker in Act of Revenge for 1M Barrels Seized in 2023,” January 11, 2024, https://oilprice.com/Latest-Energy-News/World-News/Iran-Seizes-US-Oil-Tanker-in-Act-of-Revenge-for-1M-Barrels-Seized-in-2023.html.

^[9]Mehran Haghirian and Luciano Zaccaro, “Making Sense of HOPE: Can Iran’s Hormuz Peace Endeavor Succeed?,” Atlantic Council, October 3, 2019, https://www.atlanticcouncil.org. HOPE was formally presented by Iran at the 74th UN General Assembly https://news.un.org/en/story/2019/09/1047472.

^[10]United Nations Convention on the Law of the Sea (UNCLOS), Part III, Arts. 37–44, opened for signature December 10, 1982, 1833 U.N.T.S. 397. For the US position on transit passage as customary international law, see James Kraska, Maritime Power and the Law of the Sea: Expeditionary Operations in World Politics (Oxford: Oxford University Press, 2011), 45–70.

^[11] Hugo Caminos and Vincent P. Cogliati-Bantz, “Straits and the Law of War,” in The Legal Regime of Straits: Contemporary Challenges and Solutions (Cambridge University Press, 2014).

^[12]“United Kingdom of Great Britain and Northern Ireland v. Albania,” International Court of Justice. Centred on a series of naval incidents in Albanian territorial waters established foundational rules regarding state responsibility, innocent passage, and territorial sovereignty https://www.icj-cij.org/case/1.

^[13] San Remo Manual on Armed Conflicts at Sea, 1994 (International Committee of the Red Cross) https://ihl-databases.icrc.org/en/ihl-treaties/san-remo-manual-1994.

^[14] Alexander Lott, “Blog of the European Journal of International Law,” March 10, 2026, https://www.ejiltalk.org/the-legality-of-irans-closure-of-the-strait-of-hormuz/.

^[15]Treaty for the Redemption of the Sound Dues (Copenhagen Convention), March 14, 1857. UNCLOS Art. 35(c) preserves the validity of “long-standing international conventions in force specifically relating to such straits,” leaving the Danish Straits governed by their 1857 regime rather than the UNCLOS transit passage rules.

^[16]Hansard, House of Commons Debates, Sound Dues Committee, Volume 145: debated on June 5, 1857. Great Britain and Russia each paid approximately one-third of the 33.5 million Danish rigsdalers – equivalent to roughly £3.9 million or $18.9 million at 1857 gold-standard exchange rates, https://hansard.parliament.uk/commons/1857-06-05/debates/55a6287a-a407-44bc-a64b-f1847cdfc075/SoundDues%E2%80%94Committee.

^[17]Hague Convention (V) Respecting the Rights and Duties of Neutral Powers and Persons in Case of War on Land, October 18, 1907, 2 A.J.I.L. Supp. 117; Hague Convention (XIII) Concerning the Rights and Duties of Neutral Powers in Naval War, October 18, 1907, 2 A.J.I.L. Supp. 202.

^[18] Joy Gordon, “The Brutal Impact of Sanctions on the Global South,” Yale Journal of International Law, June 28, 2023, https://yjil.yale.edu/posts/2023-06-28-the-brutal-impact-of-sanctions-on-the-global-south.

^[19]Bassam Fattouh, “An Anatomy of the Crude Oil Pricing System,” Oxford Institute for Energy Studies Working Paper WPM 40, January 2011, https://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/03/WPM40-AnAnatomyoftheCrudeOilPricingSystem-BassamFattouh-2011.pdf.

^[20] Tsvetana Paraskova, “Paper Oil Blinks While Physical Supply Tightens,” April 14, 2026. By April 2026, markets were reporting $50 a barrel premium on the price of physical crude over the quoted futures prices signals. See https://oilprice.com/Energy/Crude-Oil/Paper-Oil-Blinks-While-Physical-Supply-Tightens.html.

^[21]Malte Humpert, “Arctic Shipping Potential along the Northern Sea Route,” The Arctic Institute, October 31, 2014, https://www.thearcticinstitute.org/arctic-shipping-potential/.

^[22]Lawson W. Brigham, “Think Again: The Arctic,” Foreign Policy, September–October 2010, https://foreignpolicy.com/2010/08/06/think-again-the-arctic/.

^[23]Convention Concerning the Regime of the Straits (Montreux Convention), July 20, 1936, 173 L.N.T.S. 213.

^[24] Roderic H. Davison, Essays in Ottoman and Turkish History, 1774–1923: The Impact of the West (Austin: University of Texas Press, 1990), 112.

^[25] Harry N. Howard, The Problem of the Turkish Straits (Washington, DC: Government Printing Office, 1947), 36–38.

^[26]Adam Aliano and Russell Spivak, “Ukraine Symposium – The Montreux Convention and Turkey’s Impact on Black Sea Operations,” Articles of War (Lieber Institute West Point), April 25, 2022, https://lieber.westpoint.edu/montreux-convention-turkeys-impact-black-sea-operations/.

^[27]European Security and Defence, “Turkey Denies Passage through Bosphorous of former UK Mine Hunters gifted to Ukraine,” https://euro-sd.com/2024/01/major-news/35779/minehunters-denied-passage/.

^[28] “Russian Gas Supplies to Europe via TurkStream Hit New All-Time High in January,” The Moscow Times, February 12, 2025, https://www.themoscowtimes.com/2025/02/12/russian-gas-supplies-to-europe-via-turkstream-hit-new-all-time-high-in-january-a87962. Gas flows peaked at 56.7 million cubic metres on February 10, 2025 – the highest single-day volume since TurkStream’s launch in January 2020.

^[29] S&P Global, February 2, 2026. A year later the 15.75 Bcm/year-capacity European string of TurkStream continues to function as the only pipeline route for Russian gas supplies to Europe. See:  https://www.spglobal.com/energy/en/news-research/latest-news/natural-gas/020226-russian-gas-flows-to-europe-via-turkstream-remain-at-sustained-high-in-jan.

^[30] “Russian Gas Imports: Council Gives Final Green Light to a Stepwise Ban,” Council of the European Union, January 26, 2026, https://www.consilium.europa.eu/en/press/press-releases/2026/01/26/russian-gas-imports-council-gives-final-greenlight-to-a-stepwise-ban/.

^[31] David Osler, “US, UK and Israeli Ships Charged Three Times More Than Others for Middle East War Cover,” March 3, 2026, https://www.lloydslist.com/LL1156502/US-UK-and-Israeli-ships-charged-three-times-more-than-others-for-Middle-East-war-cover.

^[32]Lloyd’s Market Association Joint War Committee, war-risk hull classifications.

^[33]Nadia Helmy, “Behind China’s Abstention: The Calculus of not Condemning Iran’s Strikes,” Modern Diplomacy, March 22, 2026, https://moderndiplomacy.eu/2026/03/22/behind-chinas-abstention-the-calculus-of-not-condemning-irans-gulf-strikes/.

^[34] Charles Chang et al., “Saudi-China Ties and Renminbi-Based Oil Trade,” S&P Global, October 5, 2023, https://www.spglobal.com/en/research-insights/special-reports/saudi-china-ties-and-renminbi-based-oil-trade.

^[35]Mehran Haghirian and Luciano Zaccara, “Making Sense of HOPE,” Atlantic Council, October 3, 2019, https://www.atlanticcouncil.org/blogs/iransource/making-sense-of-hope-can-irans-hormuz-peace-endeavor-succeed/.

^[36]The Strait of Hormuz is approximately 39 km wide at its narrowest point; its southern shore – including the Musandam Peninsula exclave – lies within the sovereignty of Oman. Any Iranian claim to unilateral control is therefore legally incomplete without Omani participation or coercion.

^[37]Rory Medcalf, Indo-Pacific Empire: China, America and the Contest for the World’s Pivotal Region (Manchester: Manchester University Press, 2020), 201–218.