Trump announces shipping fees and port blockade in Strait of Hormuz, oil prices climb
U.S. President Donald Trump said the United States will charge a 20% fee on cargo transiting the Strait of Hormuz and reinstate a blockade of Iranian ports, prompting a rise in crude oil prices.
U.S. crude and Brent futures rose on Tuesday after President Donald Trump announced a new 20% fee on all cargo shipped through the Strait of Hormuz and the reinstatement of a blockade on Iranian ports near the waterway. West Texas Intermediate for August delivery gained 2.27% to $79.91 a barrel, while Brent for September delivery increased 2.14% to $85.11.
Trump posted on his social-media platform that the United States would levy the fee and that the blockade would become effective at 4 p.m. ET on Tuesday, according to U.S. Central Command. The measures follow an interim agreement between Washington and Tehran that had allowed shipping traffic to begin recovering after earlier disruptions.
Citi warned that the fee proposal raises the risk of further military escalation and could keep oil prices elevated through the upcoming U.S. mid-term elections. Before the February 28 strikes by the United States and Israel, roughly one-fifth of global oil supplies passed through the strait; traffic had declined after Iran targeted vessels in early March but was showing signs of rebound.