Trump abandons Hormuz toll proposal as US-Iran conflict enters fifth month
The US President’s 24-hour proposal for a 20 per cent transit fee was replaced with offers for Gulf investment deals, while oil prices surged nearly 10 per cent amid escalating hostilities.
US President Donald Trump has withdrawn a proposal to impose a 20 per cent toll on vessels transiting the Strait of Hormuz, reversing a policy announcement made just one day prior. The decision replaces the fee with an offer to negotiate trade and investment deals with Gulf allies, a shift that analysts suggest implies safe passage in exchange for economic commitments. The policy U-turn occurred as the United States resumed a naval blockade on Iranian shipping and conducted new military strikes, actions that effectively terminated a month-old memorandum of understanding (MOU) that had established a temporary ceasefire.
The initial announcement of the toll, made via social media on Monday morning, triggered immediate market volatility. Oil prices surged nearly 10 per cent, marking the largest one-day increase in six years. The proposal required all vessels, including those of US allies, to pay the fee to reimburse the United States for security costs in the region. However, the measure was abandoned the following day, with the President instead offering to strike "trade and investment deals" with Gulf states.
The resumption of hostilities marks a significant escalation in a conflict that has now lasted more than four months. At 10:16 ET on Tuesday, Trump announced the end of the ceasefire on Truth Social, calling Iranian leaders "scum" and ordering a renewed blockade of Iranian ports. This move followed a period of on-again, off-again negotiations and occasional hostilities that tested the definition of the temporary truce. The memorandum of understanding, which had envisioned Iran’s role in overseeing safe commercial passage without charge, is now considered dead by experts.
Diplomatic and legal inconsistencies have emerged from the administration’s shifting stance. Last month, US Secretary of State Marco Rubio condemned similar Iranian fee proposals as violations of international law regarding international waterways, stating that no country is allowed to charge tolls on such routes. The current proposal to levy fees on allied and neutral shipping contradicts that previous position, highlighting the administration's struggle to define a coherent policy framework for the region.
Despite military successes in degrading Iranian defence capabilities, the political resolution of the conflict remains elusive. Experts note that Iran retains the ability to deny access to the Strait of Hormuz, limiting the efficacy of US military pressure. With oil prices threatening to reignite inflationary pressures ahead of November’s midterms, the administration faces a difficult choice between further escalation and settling for a resolution that leaves a hostile Iranian regime in power. The conflict shows no sign of ending, with underlying disagreements over nuclear programmes and regional influence remaining unresolved.
