Crude oil prices retreated from session highs Tuesday, after President Donald Trump dropped its demand that ships pay a 20% protection fee to transit the Strait of Hormuz.
WE West Texas Intermediate Futures rose 1.82% to $79.56 per barrel. Brent Futures, the international benchmark, rose 1.98% to $84.95.
“Based on very productive conversations with Middle East leaders, I have decided to replace the 20 percent U.S. reimbursement fee with trade and investment agreements that individual Gulf states will enter into with the United States,” Trump said in a statement. Social truth job.
Trump demanded the fees Monday in exchange for the U.S. Navy’s protection of maritime traffic through Hormuz. The security situation in the strait has deteriorated over the past week as Iran attacks commercial shipping.
The president’s request for a tax contradicts previous U.S. opposition to tolls across the Strait. Iran has sought to collect tolls to ensure safe passage, but agreed it would not impose any for 60 days under the interim deal it signed with the United States.
The International Maritime Organization, a United Nations agency, opposes mandatory tolls in Hormuz as illegal.
U.S. crude oil was trading above $80 a barrel earlier in the session as Washington and Tehran continued to fight for control of Hormuz. The United States bombed targets along Iran’s coast on Monday in a bid to reduce Tehran’s ability to attack commercial shipping, according to US Central Command.
Iran’s Revolutionary Guard said its forces attacked two supertankers transiting Hormuz with their transponders turned off. The UAE’s national oil company, ADNOC, said two of its tankers were hit by projectiles as they crossed the strait, killing one sailor and injuring several others.
The US Navy will reimpose its blockade against Iran at 4 p.m. ET on orders from Trump, Centcom said in a statement.
Citi had warned that Trump’s proposal to impose shipping fees in the Strait of Hormuz significantly increases the risk of further military escalation.
“Also heightened is the possibility that the Iranian regime will walk away from the MOU until after the US midterm elections, a scenario that would most likely lead to higher oil prices in the long term,” the bank wrote in a report on Tuesday.
About a fifth of the world’s oil reserves passed through the Strait of Hormuz before the United States and Israel launched strikes against Iran on February 28. Maritime traffic collapsed after Iran began targeting ships in the waterway in early March, but it began to recover following Washington and Tehran’s interim deal.