President Donald Trump announced on Tuesday that he would drop his controversial plan to levy a 20% reimbursement fee on cargo passing through the Strait of Hormuz. This decision came just hours before the fee was expected to take effect and following extensive condemnation from international and US officials who argued such a toll would violate international law regarding freedom of navigation in international waterways. Secretary of State Marco Rubio had previously stated that no nation could legally charge a toll in the strait, a sentiment echoed by British Foreign Secretary Yvette Cooper.
Instead of the fee, Trump stated on Truth Social that he would pursue "Trade and Investment Deals" with Gulf states, which he described as "massive" and beneficial for both the US and the Gulf economies. He specifically mentioned that investments would primarily come from the UAE, Saudi Arabia, Qatar, Kuwait, and Bahrain. This move effectively replaces the proposed fee, which was intended to offset the costs of US naval protection in the strait following recent Iranian attacks on commercial vessels.
Oil prices remained largely stable after Trump's announcement, with Brent crude trading at around $80.99 per barrel, similar to Monday's close. Analysts had previously questioned the legality and enforceability of the proposed fee, with some estimating a very large crude tanker could have faced charges of approximately $32 million per voyage under Trump's initial plan, significantly higher than any fees Iran had previously sought, which were estimated at up to $2 million. The reversal also came after criticisms that the fee contradicted long-standing US policy on freedom of navigation.
