Global oil prices surged by more than 5% after U.S. President Donald Trump announced that the United States would resume its blockade on Iran and impose a 20% charge on cargo transiting the Strait of Hormuz.
U.S. West Texas Intermediate (WTI) crude rose more than 5% to over US$75 per barrel, while Brent crude also gained 5%, climbing above US$80 per barrel. The increase has also halted the recent decline in U.S. gasoline prices.
Financial markets reacted negatively to the announcement, with the S&P 500 falling 0.5%, while the Nasdaq extended its losses.
In a post on social media, President Trump said the United States would resume what he described as the “Iranian Blockade” and would be “reimbursed” by charging 20% on all cargo shipped through the Strait of Hormuz. However, the administration has not yet explained how the proposed mechanism would operate.
The announcement has drawn attention from the global shipping industry, which has previously opposed similar proposals by Iran to levy transit fees for vessels using the strategic waterway.
The U.S. Treasury Department has warned that companies making payments to Iran for passage through the Strait of Hormuz could face sanctions, describing such payments as “maritime extortion.”
The latest move follows continued U.S. military strikes against Iranian targets in response to attacks on commercial vessels in the region, further raising concerns over the security of one of the world’s most important energy shipping routes.
The Strait of Hormuz carries roughly 20% of global energy supplies, making any disruption to shipping through the passage a major concern for international energy markets.
Industry leaders have also reiterated their opposition to transit fees in international waterways. Chevron CEO Mike Wirth previously stated that the company would not pay any tolls for passage through the Strait of Hormuz, stressing that freedom of navigation is a long-established principle of international law.
According to Wirth, allowing countries bordering international waterways to impose transit fees could set a precedent with far-reaching implications for global shipping routes.
Source: Agencies
