US resumes Iran port blockade, while Trump scraps proposed Hormuz shipping fee

A closer view of the satellite imagery shows an Iranian port building before the recent U.S. strikes in Sarkhur Tahruyi, Hormozgan Province, Iran, July 7. Reuters-Yonhap

CAIRO/DUBAI — The United States on Tuesday said it had reimposed a naval blockade of all Iranian ports in the latest escalation in the conflict, while President Donald Trump dropped a 20 percent transit fee on shipping through the Strait of Hormuz he had pitched only a day earlier.

The U.S. also began a fresh round of strikes "to continue degrading Iranian capabilities used to attack commercial shipping in the Strait of Hormuz," the U.S. military said. Tehran has again closed the strait after hostilities between Iran and the U.S. reignited last week, fraying an already fragile truce reached in June after several months of fighting that has killed thousands.

Over the last day, Iran has struck U.S. facilities in Jordan and Bahrain, while United Arab Emirates-owned shipping tankers were hit in the strait. The renewed attacks have increased doubts that a memorandum of understanding signed last month would lead to a permanent halt in the war, which has engulfed Iran's neighbors and disrupted global energy supplies. Prior to the war's outbreak in February, the strait was used to transit about a fifth of the world's oil and gas traffic every day.

Trump on Monday floated the idea of a 20 percent fee for guarding the strait, which drew sharp criticism from several quarters, including the U.N. shipping agency, which said it opposed any fees for straits used in international navigation. After one day, he scrapped the idea and said he would instead seek investment deals with Gulf states.

American projectiles hit a location around Bandar Abbas, an Iranian city on the strait, the governor's office told state media late on Tuesday, while Iran's state news agency IRNA said that U.S. projectiles hit an area near Sirik in southern Iran. Reuters could not immediately verify the reports.

"If the U.S. thinks that by tightening its measures against us, its military actions and its economic blockade, we will return to negotiations, it is making a mistake," Iran's deputy foreign minister Kazem Gharibabadi said in an interview with state television. The naval blockade against vessels transiting to and from Iranian ports and coastal areas came back into effect at 2000 GMT (1600 EDT), after being lifted in June.

Trump said the strait was open to all shipping traffic except that of Iran. There are currently more than 20 U.S. Navy warships and hundreds of military aircraft operating across the region, the U.S. military said. Early in the conflict, Trump said the U.S. would take control of the waterway, an objective that has not been achieved. Prior to the war, Iran had not asserted the authority to control the strait.

The conflict has proved unpopular in the U.S., where gasoline prices have risen and congressional elections are looming in November. The price of benchmark Brent crude oil is up 15 percent over the last seven days to $85 a barrel, highest since mid-June.

A projectile falls at an unknown location, during what U.S. Central Command (CENTCOM) says are strikes on Iranian military targets, in this screen grab taken from a handout video released on July 11. Reuters-Yonhap

Cost of war

The war has killed thousands, primarily in Iran and Lebanon, since it began in February with joint U.S.-Israeli strikes on Iran, and has widened to include other Gulf nations as Iran retaliated against its neighbors.

While the global economy has largely weathered the energy shock fairly well, the International Monetary Fund warned last month that extending the war beyond mid-July posed big risks, especially since countries have largely used up their strategic oil reserves to cushion the effect on consumers. Half of those surveyed in a Reuters poll said they believed the war had not been worth its costs.

Iran said earlier on Tuesday that it attacked a U.S. Army base in Jordan with ballistic missiles, while Bahrain, which hosts a U.S. naval base, reported fending off an Iranian aerial attack and other Gulf states also came under fire. The UAE said an Indian crew member had been killed and eight others wounded when two Emirati oil tankers were struck by Iranian cruise missiles.

The governor's office of Iran's Qeshm Island, on the Strait of Hormuz, said it was struck by a U.S. projectile at around 7 p.m. on Tuesday, Iranian state media reported.

Meanwhile, a U.S. projectile exploded near a water and electricity facility on Iran's Kish Island, the country's semi-official Tasnim news agency said.

Jordan said it had shot down four ballistic missiles and explosions were heard in Manama, Bahrain's capital. Washington has asserted repeatedly that Iran must never have a nuclear weapon — something Tehran denies seeking — while Iran wants the end to sanctions and for other nations to recognize its control over the strait.

Trump said certain countries, without naming them, had told him they wanted to invest in the U.S. instead of being charged a fee.

It was not immediately clear what Gulf states had agreed to, if anything, and he did not mention any specific investment commitments.