U.S. President Donald Trump reversed Tuesday his plans to charge a 20% toll on all cargo going through the Strait of Hormuz as part of the conflict with Iran a day after he announced it.
Instead, Trump said Middle Eastern countries will make investment and trade deals with the U.S.
U.S. had carried out waves of attacks for the third night in a row after Iran said it had closed the strait, prompting Trump on Monday to reinstate a blockade of Iranian shipping and propose the fee.
But just a little under five hours before the fee had been due to come into effect at 2000 GMT, Trump said the strait was open to all shipping traffic except that of Iran.
"Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States," Trump said in a post on Truth Social.
The president said the investments "will be MASSIVE," though it's unclear if these would be new commitments relative to what Trump announced after a visit last year to the Middle East.
Oil futures prices pared their gains after the post after rising earlier on Tuesday. The worsening attacks had increased doubts that a memorandum of understanding signed last month would lead to a permanent halt in the war, which has disrupted global energy supplies and raised fears of a rise in inflation globally.
Iran had hit back by attacking a U.S. military base in Jordan with ballistic missiles, while Bahrain, which hosts a U.S. naval base, said it had fended off an Iranian aerial attack. Jordan said it had shot down four ballistic missiles and explosions were heard in Manama, Bahrain's capital.
Before the war, about a fifth of global oil and gas traffic passed through Hormuz daily. If the U.S. were to impose a 20% fee, it could generate around $240 million a day.
The U.N. shipping agency said it opposed any fees for straits used in international navigation and that there was no legal basis for introducing mandatory tolls on strait transits.
Later on Thursday, Trump said he did not think anybody should be able to charge a fee for ships transiting the Strait of Hormuz.
"I don't like the concept of a fee, but at the same time, it's not fair that we're protecting this strait for the entire world," he said in remarks to reporters.