Trump proposes 20% toll on cargo through Strait of Hormuz; restarts Iran blockade
Donald Trump mandates 20% transit fees and restarts U.S. naval blockade of Iranian ports
U.S. President Donald Trump announced on Monday that the United States will impose fees in the Strait of Hormuz at a rate of 20% on all cargo shipped through the waterway. Declaring America the “guardian” of the major oil shipping route, Trump stated in a post on Truth Social that the U.S. will also reimpose its blockade of Iranian ports located near the strait. U.S. Central Command confirmed that the blockade is scheduled to resume Tuesday at 4:00 p.m. ET.
The Strait of Hormuz serves as the epicenter of the U.S.’ rapidly reescalating war with Tehran. Trump’s assertion requires commercial vessels attempting the transit to pay what he described as “protection money” to the United States. This move comes as the U.S. has rejected Iran’s own plans to charge tolls to ships passing through the strait. Maritime experts, regulators, and even top Trump administration officials have previously stated that charging tolls for transit through the strait is illegal under international law.
Brent crude and FTSE 100 react to the collapse of the U.S.-Iran ceasefire deal
The announcement follows a period of extreme volatility in global energy markets. Oil markets recorded their sharpest price rise in nearly two months following a series of attacks on fossil fuel tankers near the Strait of Hormuz. These events led Donald Trump to declare that the ceasefire deal with Iran was over. The broader economic impact was felt in financial markets, where the FTSE 100 suffered its biggest one-day fall since May, dropping nearly 1.7% to 10,489. Conversely, oil companies BP and Shell bucked the trend, rising 3.5% and 2.2% respectively as the price of Brent crude, the global benchmark, increased.
The tension has also impacted government bond markets. UK short-dated bonds suffered their worst day since the end of March as the prospect grew of a Bank of England rate rise to cope with renewed inflationary pressures. The yield on two-year gilts rose 15 basis points to 4.35%, with a rate rise in November fully priced in and a 50% chance of another in December.
The current situation marks a dramatic collapse of the U.S.-Iran ceasefire. Even prior to this escalation, sources indicated that transit fees, sea mines, billions in infrastructure damage, and deep regional mistrust posed significant obstacles to a genuine recovery of the waterway. Earlier in the week, President Trump wrote on social media that strikes were “retribution for yesterday’s bombing of ships by Iran,” warning that attacks could “get much worse” if hostilities continue.
Regarding potential diplomatic overtures, the president told reporters on Air Force One that Iran had reached out recently, claiming Tehran still wants to make a deal “so badly,” though Iran has not confirmed any such overtures. The president also stated he was “not sure” if he wanted to make a deal with Tehran going forward. When asked why he viewed Iran’s leadership as “scum,” the U.S. leader told the NATO summit that he got to know ‘em. Despite the escalating rhetoric, President Trump said he did not think a full-fledged conflict would erupt in the wake of strikes from both sides.
Missile sirens sound across Gulf nations as military strikes hit coastal southern Iran
As of now, explosions have been reported in coastal areas across southern Iran, and missile sirens have sounded across Gulf nations warning of potential strikes from Tehran. The region remains on high alert as the U.S. blockade takes effect.
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