Trump Replaces Hormuz 20% Transit Fee With Gulf State Investment Deals

EcoPulse24 | Washington

US President Donald Trump announced on July 14 that he is replacing the proposed 20% transit fee on shipping through the Strait of Hormuz with trade and investment agreements to be signed between Gulf states and the United States, a move that prompted crude oil prices to surrender most of their session gains.

Trump's Announcement

In a post on his Truth Social platform on Tuesday, Trump stated that the Strait of Hormuz "is open to all vessels except Iran." He said the US would impose "a complete embargo, but only on ships going to and from Iranian ports, or that carry any Iranian cargo."

Trump explained that following what he described as "very fruitful" conversations with Middle Eastern leaders, he 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." He added that these investments would be large, mutually beneficial, and would generate "millions of high-paying American jobs." He noted that Gulf states already represent the largest dollar investment base in the US relative to any other group of nations and said the new agreements would substantially increase that figure.

Oil Market Reaction

Crude oil prices gave up the bulk of their earlier gains following the announcement. West Texas Intermediate (WTI) crude traded at $78.37 per barrel, up 23 cents on the day, while Brent crude added 65 cents to reach $83.95 per barrel. Both benchmarks had traded materially higher earlier in the session, with WTI briefly topping $80 per barrel. Oil had surged more than 4% intraday before Trump's post, following a 9.4% jump the previous session after the US reinstated a naval blockade on Iranian shipping and proposed the transit fee.

Analysts at Citi noted in a research memo cited by Reuters that the proposed 20% transit fee, had it remained in force, would have increased the probability of military escalation. The bank flagged that a potential Iranian withdrawal from any understanding with Washington could keep oil prices elevated for a sustained period. Senior market analyst Tim Waterer at KCM Trade said the conflicting positions of both sides make the supply picture considerably uncertain, even though a full closure of the Strait had not occurred.

The Broader Hormuz Context

Trump's announcement came as the US Central Command confirmed that American forces conducted strikes against Iranian military targets along the Iranian coast overnight Monday. The US military said more than 50,000 American personnel are currently deployed across the wider Middle East region. Iran's Revolutionary Guard separately claimed its forces attacked two large oil tankers crossing the Strait after their tracking transponders were disabled.

UAE energy company ADNOC reported that two of its vessels sustained damage from projectiles while crossing the Strait, resulting in one fatality and injuries among the crew. The UAE Defense Ministry stated that two UAE-flagged tankers were targeted in the southern passage of the Strait, within Omani territorial waters.

Despite the security incidents, Trump made clear that the Strait remains open to all commercial shipping other than vessels linked to Iran, and framed the US military presence as a service to the broader global trading community.

Gulf Investment as the New Framework

The decision to substitute the transit fee with investment commitments reflects the existing pattern of Gulf sovereign capital flows into the United States. The UAE, Saudi Arabia, and Kuwait together have committed hundreds of billions of dollars to US technology, infrastructure, and defense-linked sectors in recent years. By converting a fee mechanism into an investment framework, Washington signals that it values long-term capital deployment over a per-shipment levy. For Gulf states, the arrangement averts shipping surcharges that could have complicated oil export logistics and added costs across regional supply chains.

EcoPulse24 Analysis

EcoPulse24 Analysis: Trump's pivot from a 20% transit fee to Gulf investment deals is a pragmatic shift that removes an immediate pressure point for GCC energy exporters while preserving Washington's strategic leverage in the region. Oil markets responded with a controlled pullback, though Brent holding above $83 and WTI near $78 per barrel indicates the market is still pricing in a meaningful risk premium tied to the active US-Iran confrontation in the waterway. The key near-term variable is how Iran responds to the ongoing US military posture and whether the full blockade of Iranian vessels holds without broader escalation. Energy buyers, shipping operators, and Gulf policymakers will be closely watching how the investment agreement framework takes shape in the weeks ahead.