Indonesian Transit Fee Proposal And US Threats Against Iranian Oil Ships Heighten Alarm Over Strait Of Malacca

(MENAFN- Daily News Egypt) Concerns over the vulnerability of the Strait of Malacca have escalated after Indonesian Finance Minister Purbaya Yudhi Sadewa briefly proposed imposing transit fees mirroring Iranian actions in the Strait of Hormuz, coinciding with warnings from the US military that it will“aggressively pursue” Iranian shadow fleet vessels operating in the region.

Contents

• The Busiest Maritime Corridor
• Chokepoint Vulnerabilities and Alternatives
• International Law and Regional Control
• China's 'Malacca Dilemma'

Disruptions in the Strait of Hormuz, following its effective closure by Iran in response to US and Israeli military attacks, have sparked fears regarding vulnerabilities in the Strait of Malacca, a vital waterway located halfway across the globe. Sadewa raised the possibility of charging ships transiting the strait after Iran moved to impose similar fees in Hormuz, though he quickly retracted the suggestion.

The incident highlighted the extreme sensitivity of global trade to any disruption in its most heavily used corridors. Singapore responded swiftly, asserting the necessity of keeping the strait open and accessible to international shipping. Malaysia also emphasised the importance of ensuring unimpeded maritime passage, reflecting a shared interest among coastal states in maintaining the flow of traffic. Officials in the region have since confirmed that the strait will remain open without transit fees.

Adding to the geopolitical friction, waterways in Southeast Asia have been utilised for ship-to-ship oil transfers by Iran's“shadow fleet,” which transports oil clandestinely to evade sanctions, with much of it ultimately reaching Asian markets, including China. Chairman of the Joint Chiefs of Staff Dan Kin stated this month that US forces will“aggressively pursue” vessels attempting to provide material support to Iran, including those transporting Iranian oil.

Concurrently, the Indonesian Ministry of Defence is reviewing a US proposal to permit military aircraft to fly through Indonesian airspace, a request that has faced strong opposition from within the military establishment due to sovereignty concerns.

The Busiest Maritime Corridor

The Strait of Malacca, a narrow 500-mile waterway between the Indonesian island of Sumatra and the Malay Peninsula, transports more than one-fifth of global maritime trade and is the world's busiest shipping lane. Bordered by Thailand to the north and Singapore at its southern entrance, it serves as the shortest maritime route between the Middle East and East Asia.

This geographic advantage has made Malacca an indispensable corridor. The Malaysian Marine Department reported that more than 102,500 vessels transited the strait in 2025, an increase from approximately 94,300 ships in 2024.

The waterway accommodates a vast array of cargo, including crude oil, liquefied natural gas (LNG), coal, palm oil, iron ore, and manufactured goods. According to the US Energy Information Administration (EIA), approximately 23.2 million barrels of oil per day were shipped through the strait in the first half of 2025 to supply major economies including China, Japan, and South Korea. This volume exceeds the approximately 20.9 million barrels that passed through the Strait of Hormuz during the same period.

Chokepoint Vulnerabilities and Alternatives

At its narrowest point, the Strait of Malacca is just 1.7 miles (2.7 kilometres) wide, underscoring its fragility given the immense density of maritime traffic. This narrow width elevates the risks of collisions and groundings, particularly in its most congested sectors, where even minor disruptions can decelerate shipping and inflate freight costs. Security remains a persistent concern; piracy and armed robbery incidents rose to a total of 108 in the Malacca and Singapore straits in 2025.

While alternative routes exist through the Indonesian archipelago, they present significant navigational challenges and lack the convenience of the primary strait. The Sunda Strait is shallow in certain sections and situated in an active volcanic zone. Routes through the Lombok and Makassar straits add substantial time and expense; a voyage from the Saudi Arabian port of Ras Tanura to Japan becomes more than twice the distance compared to the Malacca route.

The ongoing crisis in the Strait of Hormuz has prompted Thailand, located to the northeast of the Strait of Malacca, to refocus on its long-term objective of constructing a“land bridge.” The project aims to link highways and railways across its southern peninsula to bypass the strait and reduce transit times, though it is widely regarded as highly difficult from both logistical and financial perspectives.

International Law and Regional Control

Governance of the strait is overseen by Indonesia, Malaysia, and Singapore, which exercise sovereignty over their territorial waters extending up to 12 nautical miles from their coastlines under the United Nations Convention on the Law of the Sea. The three coastal nations established a tripartite framework in 1971 to coordinate the strait's management.

Classified as an international strait, the waterway guarantees ships and aircraft the right of transit passage, permitting continuous and unimpeded movement. Under international law, coastal states cannot suspend transit or impose fees solely for passage, though charges for specific services are permissible. The three nations, alongside Thailand, coordinate closely on security and safety, including joint patrols and anti-piracy operations. Although no single nation maintains absolute control over the strait, their geographic positions confer significant leverage over one of the world's primary trade routes.

China's 'Malacca Dilemma'

China remains acutely vulnerable to risks in the Strait of Malacca. As the world's largest oil importer, the majority of its seaborne supplies transit the waterway. Chinese leaders have long viewed the strait as a strategic vulnerability in the event of conflict, a concept commonly referred to as the“Malacca Dilemma,” a term popularised during the presidency of Hu Jintao in the early 2000s.

This vulnerability has driven Beijing to intensify efforts to diversify its supply routes, including the construction of pipelines from Central Asia and Russia, and investments in alternative corridors under the Belt and Road Initiative, such as routes through Myanmar.

Nevertheless, maritime routes remain central to the Chinese economy, leaving it highly sensitive to disruptions along the Malacca corridor. The strategic landscape is further complicated by overlapping territorial claims in the adjacent South China Sea and the broader strategic rivalry between Beijing and Washington for maritime influence in the region.

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