More recently, Oman, one of the countries bordering the Strait of Hormuz, has raised the prospect of charging fees on ships transiting the strait and has been analysing how other global chokepoints are managed. The prospect of fees in Hormuz has left some shipowners and traders wondering what that could mean for the Strait of Malacca, which remains toll-free for now.
What’s the significance of the Strait of Malacca?
The Strait of Malacca is one of the world’s most important shipping lanes, linking the Indian Ocean with the South China Sea and the wider Pacific. Stretching about 805km between the Indonesian island of Sumatra and the Malay Peninsula, with Thailand to the north and Singapore at its southern entrance, it provides the shortest sea route between the Middle East and East Asia.
That efficiency has made it indispensable. More than 102,500 ships transited the strait in 2025, up from about 94,300 the previous year, according to Malaysia’s Marine Department. A wide mix of cargo passes through the waterway, including crude oil, liquefied natural gas, coal, palm oil, iron ore and manufactured goods.
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In the first half of 2025, about 23.2 million barrels of oil a day were shipped through the strait, according to the US Energy Information Administration, supplying major economies including China, Japan and South Korea. That exceeds the roughly 20.9 million barrels that passed through the Strait of Hormuz over the same period.
What makes the Strait of Malacca a chokepoint?
At its narrowest, the strait is just 2.74km wide, underscoring its vulnerability given the sheer volume of traffic it carries.
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That increases the risk of collisions and groundings, particularly in its busiest stretches. Even localised disruption can slow traffic and push up shipping costs. Piracy and armed robbery are also of concern: There has been an uptick in attacks, with a total of 108 incidents in the Malacca and Singapore straits in 2025.
While alternative routes through Indonesia’s archipelago exist, they aren’t as convenient or easy to navigate. The Sunda Strait is shallow in parts and lies near an active volcano. The route via the Lombok and Makassar straits adds significant time and expense; a voyage from the port city of Ras Tanura in Saudi Arabia to Japan is more than twice the distance of a transit via the Strait of Malacca.
Are there fees charged for transiting the Strait of Malacca?
Currently, there are no mandatory tolls levied by coastal states to transit the Strait of Malacca. The corridor is classified as an international strait, meaning ships have the right of transit passage, allowing them to move continuously and without obstruction. Under international law, coastal states cannot suspend transit or charge ships solely for passage, though they may charge fees for specific services, such as rescue operations.
Indonesia, Malaysia and Singapore border the strait and exercise sovereignty over their territorial waters, which can extend up to 12 nautical miles from their coastlines under the United Nations Convention on the Law of the Sea. They established a tripartite framework in 1971 to coordinate management of the Strait of Malacca and they also work with Thailand on security and safety, including anti-piracy efforts and joint patrols.
Instead of toll fees, the three countries receive voluntary financial contributions through a fund established under the Cooperative Mechanism for the Straits of Malacca and Singapore to help maintain navigational aids such as buoys, beacons and lighthouses. Publicly identified government contributors include Japan, China, India, South Korea, Saudi Arabia and the United Arab Emirates.
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In 2017, Singapore disclosed that US$22 million ($28.5 million) had been raised over a 10-year period, or roughly US$2.2 million per year. In late 2025, Singapore’s maritime regulator announced commitments of only several hundred thousand dollars — far less than Iran has proposed charging in tolls for a single oil tanker to transit the Strait of Hormuz.
Why is there increased anxiety about the Strait of Malacca?
Threats to shipping in the Strait of Hormuz have underscored how quickly chokepoints can become political flashpoints, disrupting trade and weighing on the global economy.
In April, Indonesian Finance Minister Purbaya Yudhi Sadewa caused a stir when he floated — and quickly walked back — the possibility of charging ships transiting the Strait of Malacca after Iran moved to do so in the Strait of Hormuz. Singapore responded quickly, stressing that the strait must remain open and free for international navigation. Malaysia has also emphasised the importance of maintaining unimpeded passage, reflecting a shared interest among littoral states in keeping traffic flowing.
The Hormuz crisis has also spurred Thailand, just to the northeast of the Strait of Malacca, to refocus on its long-standing goal of creating a land bridge of highways and railways across its southern peninsula. That would bypass the strait and cut transit times, but it is seen as a challenging endeavour both logistically and financially.
Why is the Strait of Malacca so important to China?
China is among the countries most exposed to risks in the Strait of Malacca. It’s the world’s dominant goods exporter and its largest oil importer, with most of its supplies transported by sea and passing through the waterway.
That vulnerability has driven efforts to diversify supply routes, including pipelines from Central Asia and Russia, as well as investments in alternative corridors under Beijing’s Belt and Road Initiative, such as those across Myanmar. Even so, maritime routes remain central to China’s economy, leaving it highly sensitive to instability along the Malacca corridor.
China’s leaders have long viewed the strait as a strategic vulnerability in a conflict scenario — a concern often referred to as the “Malacca Dilemma,” a term popularised during the presidency of Hu Jintao in the early 2000s. The picture is further complicated by competing territorial claims in the nearby South China Sea and Beijing’s strategic rivalry with the US for maritime influence in the region.
Southeast Asia’s waterways have also been used for ship-to-ship transfers involving Iran’s “dark fleet,” which moves oil through covert methods to evade sanctions, with much of it ultimately reaching Asian markets, including China. Chairman of the US Joint Chiefs of Staff Dan Caine said in April that American forces would “actively pursue” vessels attempting to provide material support to Iran, including those carrying Iranian oil. — Bloomberg Quicktake
