Iran is tightening its control of the Strait of Hormuz, announcing a formal transit regime for ships within a vastly expanded zone of claimed military control around the critical energy chokepoint.The Persian Gulf Strait Authority (PGSA), which Iran says will administer the strait and transiting ships, claims to have oversight across an area of more than 22,000 sq km that extends into the territorial waters of Oman and the UAE.Iran has allowed only a trickle of vessels through the strait — which accounted for a fifth of the world’s energy flows during peacetime — ever since the war launched by the US and Israel in late February.The latest move could be seen as an attempt to strengthen its negotiating position with the US amid the fragile ceasefire in West Asia.Here’s a look at what the PGSA is, its legality and the effect it could have on global trade.Iran’s Islamic Revolutionary Guard Corps has already set up an informal system, often referred to as a “toll booth”, for clearing vessels through the Strait of Hormuz.This tiered approval process involves priority access for ships belonging to certain allies, with some ships being charged a fee, according to a Reuters report.Story continues below this adThe creation of the PGSA is essentially a formalisation of the existing system.The PGSA, according to its newly created X account, is a “legal entity and representative authority of the Islamic Republic of Iran for managing the passage and the transit through the Strait of Hormuz”.Tehran has said that shipping within the boundaries of control by the Iranian government requires “full coordination” with the Iranian armed forces.The defined boundaries for this control zone are: “The line connecting Kuh Mobarak in Iran and the south of Fujairah in the UAE in the east of the strait to the line connecting the end of Qeshm Island in Iran and Umm al-Qaiwain in the UAE in the west of the strait.” This zone extends into the territorial waters of Oman and the UAE. PGSA maritime Zone access areaVessels that wish to transit through the strait are expected to email the PGSA details such as identification number, origin, cargo details and the nationalities of the crew onboard. The authority then approves and taxes vessel transits.Story continues below this adIs charging a fee for transit legal?The short answer is no. But there are claims and counter-claims over the issue.The 1982 United Nations Convention on the Law of the Sea (UNCLOS) gives coastal States the right to claim territorial seas up to 12 nautical miles. So, the Strait of Hormuz, which is just 17.8 nautical miles (or 33 km) wide at its narrowest point, falls within the territorial waters of both Iran and Oman.But UNCLOS also classifies the Strait of Hormuz as a “strait used for international navigation”. This means ships have the right of “transit passage” through the strait — meaning they can pass unimpeded. This “transit passage” condition is meant to ensure that global chokepoints such as the Strait of Hormuz remain unhampered by coastal states’ control.So what’s the justification for the move? Iran signed the UNCLOS convention but never ratified it. So it says it is not bound to this framework and can push for the global recognition of the PGSA.Story continues below this adAlso read | Iran leveraging the Strait of Hormuz has roots in history. Here’s what its planning for the futureTehran relies instead on the older 1958 Geneva Convention framework, which provides for the more limited right of “innocent passage”. This “innocent passage” regime allows a coastal state to reserve the right to unilaterally suspend movement should it deem a vessel a threat.But it’s widely agreed that the right to “transit passage” under UNCLOS supersedes the right of “innocent passage” under the Geneva Conventions. Transit passage is also binding on non-parties — such as the US, which has neither signed nor ratified UNCLOS.The additional issue with Iran’s argument is that the inbound and outbound shipping lanes in the Strait of Hormuz largely fall within Omani territorial waters. Oman has signed as well as ratified UNCLOS.Iran’s claimed zone of “military control” also extends well beyond its territorial waters.Story continues below this adHow global trade will be affectedWhat will likely alarm the global community is the lack of transparent information over the operations of the PGSA and the amount of expected tariffs. This could give Iran heavy leverage over how much it charges from those it sees as allies and those it doesn’t.NewsletterFollow our daily newsletter so you never miss anything important. On Wednesday, we answer readers' questions.SubscribeBut the formation of the PGSA is not the only problem. On May 1, the US Foreign Office of Assets Control warned countries of severe sanctions if they pay Iran for safe passage through the strait.This has put several nations in a dilemma — do they pay the PGSA to secure the movement of their energy shipments or risk sanctions from the US, a major trading partner for many countries?India, which depends on the waterway for receiving a bulk of its oil and gas imports, finds itself in a muddled situation now. As of now, some Indian-flagged tankers have transited the Strait of Hormuz safely. India has denied making any payment to Iran for safe passage.Story continues below this adIt is also unclear whether the PGSA will survive any future peace deal between the US and Iran. If it does, the existence of this body could fundamentally reshape the mechanics of energy supplies through the chokepoint and alter trade agreements, regulations and export patterns.Akshita Chauhan is an intern with The Indian Express