U.S. President Donald Trump on Tuesday abandoned plans to impose fees on ships using the Strait of Hormuz, saying Gulf nations would instead boost investment in the United States, as renewed U.S. strikes on Iran and Iranian attacks on shipping and American allies further undermined an interim peace agreement.
The temporary deal had been expected to reopen the strategic waterway, a vital route for global energy supplies, while giving negotiators time to work toward a permanent settlement to the conflict. Instead, fighting has escalated again, raising concerns over the global economy and prompting new warnings for commercial airlines.
The Strait of Hormuz, through which about one-fifth of the world's traded crude oil and natural gas passes during peacetime, has become the centre of the conflict. During the war, Iran effectively disrupted traffic by attacking and threatening vessels, pushing up global prices for oil, fertiliser and other commodities.
More recently, Iran has targeted ships using a U.S.-supervised shipping route outside its territorial waters, triggering a series of retaliatory strikes. Washington has warned it could reopen the strait by force, although experts say such an operation would require a much larger military deployment.
Trump replaces shipping fees with Gulf investment plan
On Monday, Trump announced that the U.S. would reimpose a blockade on Iranian ports and charge ships fees equal to 20% of their cargo value to help cover the cost of securing the strait. However, he reversed the fee proposal a day later, while confirming that the blockade would still take effect in the coming hours.
"Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States," Trump wrote on social media.
He said the expected investments would be "massive," although it remains unclear whether they represent new commitments beyond those announced during his Middle East visit last year.
US-Iran exchanges continue
The U.S. military's Central Command said it had struck several targets in Iran, including coastal defence systems, missile and drone sites, and maritime facilities. Iran confirmed the attacks but did not immediately report casualties or damage.
The U.S. military said the strikes were aimed at reducing Iran's ability to target civilians and commercial shipping in the Strait of Hormuz.
Iran responded by launching attacks targeting Bahrain, Jordan and three tankers travelling through the strait. Kuwait's military also reported responding to an aerial attack but provided no further details.
Two of the targeted tankers, linked to the United Arab Emirates, caught fire temporarily. The International Maritime Organization said the attacks on the Mombasa and Al Bahiyah killed two mariners and injured 14 others. The UAE warned it would retaliate.
Dutch shipping company Stolt Tankers said one of its vessels, Stolt Magnesium, came under attack off the coast of Oman, causing a fire in its engine room. The company said all crew members were safe.
Iran's Revolutionary Guard claimed the Mombasa and Al Bahiyah had ignored repeated warnings. Tehran has previously targeted vessels using a shipping route near Oman that lies outside Iranian territorial waters.
Hours after Washington announced it had ended its latest round of strikes, Iran's state-run IRNA news agency reported that at least four locations in the Gulf city of Bushehr had come under attack, raising speculation that Gulf Arab states may have carried out retaliatory strikes without publicly acknowledging them.
The European Union Aviation Safety Agency advised airlines to avoid the airspace of Bahrain, Kuwait, Qatar, the United Arab Emirates and the Gulf of Oman, warning that the volatile military situation posed a high risk to civilian flights.
Interim agreement under growing strain
The renewed violence has placed the interim peace agreement under increasing pressure. The 60-day deal was intended to provide time for negotiations on a broader accord, including Iran's disputed nuclear programme and other regional issues.
Trump's decision to restore the blockade further complicates those efforts. The United States had lifted a blockade imposed in mid-April as part of the temporary agreement, but the U.S. military said it would reinstate it from midnight Wednesday in Dubai.
The proposed shipping fees would also have marked a major shift in longstanding U.S. policy, departing from recent assurances by U.S. Secretary of State Marco Rubio that the strait would remain open to all vessels without tolls.
Under the interim agreement, Iran agreed to allow free passage through the Strait of Hormuz for 60 days, but the arrangement did not specify what would happen afterward. Tehran maintains it has the right to regulate traffic through the waterway and potentially impose charges, a position disputed by Washington.
Brent crude oil briefly climbed above $87 a barrel early Tuesday, well below the nearly $120 peak seen during the height of the conflict but still high enough to fuel inflation concerns. Prices later fell to around $78 after Trump announced he was dropping the fee plan.
Mediation efforts continue
Regional mediators are continuing efforts to bring the United States and Iran back to the negotiating table, according to two regional officials familiar with the talks. Speaking on condition of anonymity, they said Pakistan-led mediation was working around the clock to revive the ceasefire.
Meanwhile, Lebanese and Israeli delegations were scheduled to meet in Rome on Tuesday for another round of U.S.-mediated negotiations.
Hezbollah entered the conflict in support of Iran shortly after the war began on Feb. 28, launching attacks on Israel that prompted an Israeli ground offensive in Lebanon.
Last month, Lebanon and Israel announced a framework agreement calling for the withdrawal of Israeli forces from southern Lebanon in exchange for Hezbollah's disarmament, but implementation has stalled.
Although a ceasefire currently holds in Lebanon, uncertainty remains over whether it can survive if fighting between the United States and Iran escalates into a full-scale war once again.