US President Donald Trump on Tuesday suggested investments from Gulf states would compensate America for protecting commercial shipping through the Strait of Hormuz, reversing a proposal to charge a 20 per cent toll on cargo shipped through the vital waterway.
In a post on Truth Social, Mr Trump said he replaced the 20 per cent charge after "highly productive conversations with Middle East leadership". He also said the "massive" investments would benefit both the US and Gulf economies.
The President said in the same post that the US would maintain its blockade on vessels travelling to and from Iranian ports or carrying Iranian cargo, while keeping the strait open to international shipping.
Mr Trump told reporters at the White House the investments would "primarily" be from the UAE, Saudi Arabia, Qatar, Kuwait and Bahrain, "then others".
"They would love to invest more money in the United States at record amounts, and that would be very acceptable. And this way, there's no fee," he said.
Oil prices gained after Mr Trump announced he was abandoning the toll. Brent, the international benchmark for crude, was trading 1.56 per cent higher at $84.62 per barrel, while West Texas Intermediate, which tracks US crude, was up 1.23 per cent at $79.10 as of 1.40pm ET.
Mr Trump first pitched the plan to receive compensation for guarding the strait, through which one-fifth of the global energy supply passes, on Monday. The UN's shipping agency said it opposed placing fees on passage through waterways but said it would wait for additional details from the White House.
He made the announcement a few hours before the fee was due to come into effect.
"I don't think anybody should be able to charge a fee," Mr Trump said. "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."
The US had previously opposed Iran charging a toll on ships in the strait.
But Mr Trump demanded the fee after Iranian attacks on commercial ships in the strait, where traffic has fallen to its lowest point in more than a month, according to Kpler data.
The President last week said the interim ceasefire between Washington and Tehran was over after Iranian strikes on vessels in the strait. The agreement was supposed to outline steps to reopen the waterway, whose effective closure for more than 100 days threatened the global economy.
