Tehran condemns US plan to seize frozen Iranian assets for Strait of Hormuz damages

Tehran has strongly rejected US President Donald Trump’s pledge to utilise frozen Iranian assets to compensate for damages to ships and cargo in the Strait of Hormuz, describing the move as an “incendiary precedent”. Iranian Foreign Minister Abbas Araghchi warned that normalising the confiscation of state funds poses systemic risks to global governance, stating that “ensuing chaos will not be pretty or peaceful” if governments proceed with such measures.

The diplomatic clash follows a sustained escalation in military activity, with Washington completing its 13th consecutive night of strikes on Iran late on Thursday. President Trump, writing on his Truth Social platform, asserted that damages would be paid for by “Iranian Money that the United States has in its possession, and controls”. He characterised the seizure as the “fair and equitable thing to do”, despite acknowledging that the potential damages could be “very substantial”.

In response to the threat, Araghchi posted on X on Friday morning, arguing that seizing another country’s assets to pay for unrelated future claims undermines international financial stability. The Foreign Minister cautioned that those who profit from such confiscations should remember that once governments normalise this practice, no state’s assets remain safe.

The dispute over frozen funds was a central point in a memorandum of understanding signed in June between Tehran and Washington, intended as a pathway to end the war. That agreement has now collapsed, leaving the status of approximately $100bn in Iranian funds—originally frozen in 1979 following the US embassy hostage crisis—uncertain. The exact value of these assets remains unknown, though estimates place them near that figure.

Military tensions continue to rise on multiple fronts. The Iranian army announced via state Mehr News Agency on Friday morning that it had launched a new wave of drone attacks on US military installations in Bahrain and Jordan. Simultaneously, Trump pledged “major military punishment” for Iran and its Houthi allies after Yemeni fighters struck two Saudi oil tankers in the Red Sea, with the President considering further “massive” attacks on the country.

Commercial impacts are already evident in the region. Ship tracking data reported by Reuters indicates that tanker traffic in the Strait of Hormuz fell to just one vessel on Thursday, marking the lowest level since 7 May. The drop in traffic underscores the growing instability in one of the world’s most critical energy chokepoints as diplomatic channels remain closed.