President Donald Trump says the US will reinstate a blockade of the Strait of Hormuz and impose a 20% fee “on all cargo shipped” to help pay for it.
“The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran,” Trump wrote on Truth Social on Monday morning. “We are reinstating the THE IRANIAN BLOCKADE, so named because it is only stopping Iran’s ships or customers from entering or leaving.”
Trump said the US would charge a 20% fee “on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World.”
“The process and formation will begin immediately,” he wrote.
Trump’s announcement signals a further breakdown of an extremely tenuous ceasefire agreement between the US and Iran. The US-Iran War has disrupted the usual flow of oil through the Strait, one of the most critical passageways for the global oil market. Before the conflict, roughly 20% of the global oil supply flowed through the Strait of Hormuz.
US stocks sank on the news, a sign that traders are growing less optimistic on a resolution with Iran and more fearful of the inflationary impact of the war.
Major stock indexes dropped. The Nasdaq 100 fell more than 1% as the sell-off in chip and memory stocks intensified.
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Here’s where US indexes stood shortly after 12:30 PM ET on Monday:
- S&P 500: 7,521.79, down 0.71%
- Dow Jones Industrial Average: 52,413.08, down 0.43% (-223.93 points)
- Nasdaq 100: 29,287.39, down 1.80%
Oil prices have jumped as the ceasefire has continued to break down. Brent crude, the international benchmark, surged more than 5% to trade around $80 a barrel. West Texas Intermediate crude also rose 5% to trade around $75 a barrel. The 10-year US Treasury yield rose 4 basis points to 4.61%.
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In recent days, the US has conducted a series of strikes against Iranian targets, which the Pentagon said were aimed at degrading Iran’s ability to control the Strait.
Earlier Monday, Trump signaled that he had run out of patience with the Iranians and was ready to return to a more aggressive posture.
“We’re taking over the Strait,” Trump said during an interview on Fox News.
It is unclear how Trump would impose the 20% fee. Earlier in the conflict, he asked US allies to help secure the waterway but received little support in return.
Trump said the US would be “THE GUARDIAN OF THE HORMUZ STRAIT” but would impose the fee “as a matter of FAIRNESS.” At other points of the conflict, Trump has said that the state of the Strait is not the US’ concern.
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