Trump reverses 20% Strait of Hormuz toll, demands Gulf investment deals as US-Iran fighting resumes

Policy reversal

President Donald Trump on Tuesday scrapped his plan to impose a 20% transit fee on ships crossing the Strait of Hormuz, just one day after declaring the United States the waterway's "guardian." He announced the reversal on Truth Social, saying it followed "highly productive conversations with the leadership of the Middle East."

Based on highly productive conversations with the leadership of the Middle East, I have decided to replace the 20% Reimbursement Fee with Trade and Investment Agreements that the various Persian Gulf States will make in the United States.

The president said the investments would be "massive" and would bring factories and jobs to the US. He did not specify whether these were new commitments beyond those announced after his Middle East trip last year. The shift replaced a 20% levy he had unveiled Monday, when he also proclaimed that the US was reimposing a naval blockade on Iran.

Renewed military escalation

The blockade, however, remained in effect only for ships entering or leaving Iranian ports. Trump described Iran's leadership as "lying, violent and malicious" and declared the Strait open to all other traffic. Hours before the announcement, the US had struck Iran, and Iran retaliated with attacks on American allies in the region.

The renewed hostilities tore apart a tentative ceasefire memorandum signed on June 17 that was meant to pause the fighting, reopen the strait and give negotiators time to craft a permanent end to the war. Iranian lawmakers responded by seeking to officially end the truce, with 180 parliamentarians signing a letter to that effect. Regional mediators struggled to bring the two sides back to the negotiating table, while Trump met at the White House with Iraq's new prime minister, Ali al-Zaidi.

Oil market reaction

Oil prices moderated after Trump abandoned the toll plan. Brent crude, the European benchmark, fell back to about $84.5 per barrel after touching an intraday high above $87. West Texas Intermediate, the US benchmark, retreated to $79 from a session peak of $81.23. Brent still recorded a daily gain of 1.5%, well below the nearly 5% increase it had reached at the height of the day's alarm. Over the past two weeks, oil prices have risen almost 15% as the Strait of Hormuz became the focus of the conflict.

Shipping industry warnings

Shipping executives warned that Trump's abrupt shifts undermine international maritime conventions and create dangerous uncertainty. Lasse Kristoffersen, CEO of Norwegian logistics and car-carrier firm Wallenius Wilhelmsen, said the constant changes make it harder for companies to decide when to resume normal trade. Jakob Larsen, head of maritime safety and security at BIMCO, the world's largest shipping association, said the plan raised the risk that other nations might try to monetise waterways they border, adding to global transport costs and fuelling inflation.

Of course, that is very, very problematic from a shipowner's perspective and for shipping in general. It will only increase the cost of transport worldwide, and that will eventually hit the end customer and create inflationary pressure.

In the meantime, the US and Iran continued to exchange strikes across the Persian Gulf, leaving the critical energy chokepoint far from reopened.