$10 trillion chokepoint: Iran now targets undersea cable networks in Strait of Hormuz

Iran has announced a sweeping new mandate to take full control of seven critical undersea fiber-optic cables passing through the Strait of Hormuz, a move that threatens to turn the world’s most vital energy corridor into a digital chokepoint.   

The Iranian Revolutionary Guard Corps (IRGC) declared that foreign operators must now obtain Iranian permits and pay “protection fees” to maintain infrastructure on the seabed, citing national sovereignty.

The announcement comes amid a 72-day naval standoff with the United States, raising immediate alarms over the security of the $10 trillion in global financial transactions that pulse through these cables daily.   

The new digital frontline  

The Strait of Hormuz is famously known as the throat of the global oil trade, but it is equally vital to the invisible architecture of the internet. Seven major cables, including the Asia-Africa-Europe 1 (AAE-1) and the FALCON network, snake across the seabed here, connecting the digital economies of Europe, Asia, and the Gulf states.   

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Iran’s state-run Tasnim News Agency justified the move by claiming “sovereignty” over the seabed under the UN Convention on the Law of the Sea. The IRGC has proposed:   

• Initial licensing fees for all foreign companies operating in the strait.   
• Annual “protection” payments from tech giants including Meta, Amazon, and Microsoft.   
• Exclusive Iranian control over all maintenance and repair operations within the zone.   

A fragile web under threat  

Undersea cables are the backbone of modern life, yet they are surprisingly vulnerable. While 75% of cable damage is typically accidental — caused by fishing trawlers or dragging anchors — the current conflict introduces the risk of state-sponsored sabotage.   

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“In a situation of active military operations, the risk of unintentional damage increases,” says Masha Kotkin of the Stimson Center. “If a vessel is struck and loses maneuverability, it could drag an anchor across these lines, triggering a blackout that satellite systems simply cannot fix.”   

Why undersea cables matter  

Despite the rise of satellite technology like Starlink, undersea cables remain the undisputed heavyweights of global connectivity.   

The cost of connection  

Building and maintaining these networks is a massive financial undertaking. A single transoceanic cable system can cost between $300 million and $1 billion to deploy. Once laid, they require specialized deep-sea vessels for repairs — ships that may now be blocked from entering the Strait of Hormuz without Tehran’s explicit, and likely expensive, permission.   

If Iran successfully enforces this “digital toll,” the cost won’t just be measured in dollars, but in the stability of the global internet. For data-heavy economies like India and the UAE, any disruption could mean financial paralysis within minutes.