Recent legislation of Iran regarding Hormuz changes everything in the economy

Iran government has approved via legislation, the creation of "Persian Gulf Strait Authority" PGSA, which will be the new governance intitution.

Legislation establishes the following:

• Payment priority in Iranian currency
• Emission of guarantees in Iranian Banks.
• If a country caused damage in the recent war, reparation costs must be paid before getting permission for transit. Countries that have sanctioned Iran or blocked Iranian money do not have permission for transit.
• The correct name is "Persian Gulf" for all legal purposes.
• Failure to comply will result of seizing the ship and a fine equivalent to 20% of the cargo value.

USA applied extraterritorial US law in violation of international law to conduct piracy in international waters near Venezuela. The problem of doing something is that it entitles others to do the same, so now Iran reclaims via legislation the Hormuz waters as territorial waters as shown in the map. So American ships will not be able to pass. And these waters are under legal jurisdiction of PGSA. USA cannot do anything about it, neither diplomatically or militarily.

United Nations Convention on the Law of the Sea (UNCLOS) is the primary international treaty that governs how nations use the world's oceans, including defining territorial waters (12 nautical miles from shore) and the critical right of "transit passage" through international straits like the Strait of Hormuz. Iran is not actually a party to the UNCLOS treaty.

U.S. has effectively abandoned previous norms of freedom of navigation in favor of a blockade, fundamentally altering how the strait is controlled . Iran rejects this, asserting its sovereignty over the waters and arguing that, as a non-signatory to UNCLOS, it is not bound by many of its provisions.

While Iran signed the treaty in 1982, its government has never completed the ratification process to formally adopt it as binding law.

IRGC also communicated that ships can only pass through the designated corridor, and any ships attempting to pass through any other corridor will be attacked.

One thing to notice is that the waters around Fujairah are under the waters under PGSA jurisdition. Fujairah is important because it allows oil to bypass the strait. Singapore, Rotterdam, and Fujairah are the world’s top three marine fuel (bunkering) hubs, supplying over 50+, 10, and 7.5 million tonnes annually. They provide vital infrastructure for conventional, low-sulfur, and alternative fuels (LNG/biofuels) along key maritime routes.

Hormuz is surrounded by Iranian territory with mountains where it is easy to hide missiles, drones which are perfectly capable of hitting anything that attempts to pass through the PGSA jurisditction.

On May 6, 2026, Iranian Foreign Minister Abbas Araghchi met with Chinese Foreign Minister Wang Yi in Beijing. They discussed strengthening bilateral ties and regional developments amidst ongoing tensions between Iran and the United States.

All this happens one week before Trump's meeting with Xi Jinping. Trump expected to meet Xi Jinping and say "I control Hormuz, so you buy my expensive American oil".

But it is not going as planned, since Hormuz and access to Fujairah now is under PGSA jurisdiction as per Iranian law. And it is very likely hat Iran will enforce such jurisdition with missiles and drones.

After the meeting with Wang Yi, media coverage indicated that China sees Iran now different that Iran before the war. Iran demonstrated capabilities and power, and a new era of cooperation started between Iran and other countries.

The strait was open before the war. Now it is under control of Iran. And this war made Iran to be more respected as a superpower albeit USA.