US President Donald Trump has dropped a proposal to impose a 20 percent fee for protecting the Strait of Hormuz as part of the conflict with Iran, saying today that he would instead seek to reach investment agreements with Gulf states.
US forces carried out waves of strikes for a third consecutive night after Tehran said it had closed the strait, prompting Trump on Monday to reimpose a blockade on Iranian shipping and propose the aforementioned compensation.
However, just under five hours before the fee was due to take effect at 20pm GMT, Trump announced that the strait was open to all maritime traffic, except Iranian.
"Based on very productive discussions with Middle Eastern leaders, I have decided to replace the United States' 20 percent tariff with trade and investment agreements that the various Gulf states will enter into with the United States," he wrote on his social network Truth Social.
Oil futures prices moderated their gains after the announcement, having risen earlier in the day.
The intensification of attacks has raised doubts that a memorandum of understanding signed last month will lead to a permanent end to the war, which has disrupted global energy supplies and heightened fears of rising inflation around the world.
Iran retaliated with a ballistic missile attack on a US military base in Jordan, while Bahrain, which hosts a US naval base, said it had repelled an Iranian air strike. Jordan said it had shot down four ballistic missiles, with explosions heard in Manama, the Bahraini capital.
Before the war, about a fifth of the world's oil and gas traffic passed through the Strait of Hormuz every day. If the United States were to impose a 20 percent tariff, it could generate about $240 million a day.
The United Nations Maritime Transport Agency has said it opposes any charges for straits used for international navigation and that there is no legal basis for imposing mandatory tolls for passage through the straits.
See more:
Download the app and follow the news
FOLLOW US ON
