Oil prices saw a significant jump, with U.S. crude closing 9.4% higher at $78.14 per barrel and international Brent crude surging 9.6% to $83.30 per barrel. These benchmarks are now at their highest levels since June 15, with Brent experiencing its largest single-day increase since May 2020. This spike followed President Trump's declaration on social media that the U.S. would resume its blockade on Iran and seek a 20% reimbursement on all cargo passing through the Strait of Hormuz.
Trump stated that the U.S. would be known as "THE GUARDIAN OF THE HORMUZ STRAIT" and that the 20% fee would compensate the U.S. for maintaining safety and security in the region. The blockade against vessels transiting to or from Iranian ports and coastal areas was set to begin at 4 p.m. ET on Tuesday. The International Maritime Organization (IMO) quickly rejected Trump's proposal, asserting there is no legal basis for mandatory tolls in straits used for international navigation. Chevron CEO Mike Wirth previously stated that his company would not pay fees to Iran for passage.
Even before Trump's announcement, traffic in the Strait of Hormuz had already declined significantly, with MarineTraffic by Kpler reporting a 52% week-over-week drop. Only 12 authorized crossings were observed on Sunday, a 52% drop compared to the previous weekend. The Strait, which previously saw 20% of the world's energy supplies pass through, handled upward of 100 vessel transits daily before hostilities broke out. Patrick De Haan, an analyst at GasBuddy, predicts national average gasoline prices could reach $4 per gallon within 7-10 days.
The U.S. Treasury Department has warned that paying Iran for passage through the Strait of Hormuz could lead to sanctions violations, labeling it as "maritime extortion." Similarly, a 20% charge from the U.S. for a supertanker could amount to approximately $32 million, significantly higher than previous tolls proposed by Iran, which were around $2 million. The key question for shipowners, operators, and insurers now is whether commercial traffic can continue safely and consistently through the Strait of Hormuz.
