President Trump said on Tuesday that the US has abandoned plans to impose a 20% protection fee on vessels transiting the Strait of Hormuz, adding that Gulf states would instead increase trade and investment with Washington.
"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 social media post.
Trump's reversal comes a day after he floated the idea, saying direct investments from Gulf states in the US would replace the toll fee. However, he did not specify the value of the investment or which countries would participate.
The US President noted that oil is flowing like "never before" and declared that the Strait of Hormuz was now open to all commercial vessels, except those traveling to or from Iranian ports or carrying Iranian cargo, while crediting the US military for securing the strategic waterway.
"We will ... have a full blockade, but only on ships coming to and from Iranian ports, or carrying anything have to do with Iranian cargo," Trump said in his post.
He did not provide details on how the restrictions would be enforced or the legal framework underpinning the measures.
The Hormuz, located between Iran and Oman, carries about 20% of global oil consumption as well as significant volumes of liquefied natural gas, making it one of the world's most critical energy transit routes.