Trump drops Hormuz fee plan in favour of Gulf investment deals

US President Donald Trump stepped back from a proposal to charge a 20% transit fee to guard the ‌vital Strait of Hormuz waterway as part of the conflict with Iran, saying on Tuesday he would instead seek investment deals with Gulf states.

US forces had carried out waves of attacks ​for the third night in a ⁠row after Tehran 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 a US naval blockade ‌of all Iranian ports and Iranian coastal areas 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," he said in a post on Truth ‌Social.

Trump said later on Tuesday that he did not like the concept of a fee for using ​the strait and said ‌countries had called him to say they wanted to invest in the US instead of being charged a fee.

It was not immediately clear what Gulf states had agreed to, if anything. Trump did not ‌mention any commitments by them, saying only in his post: "Investments will be MASSIVE but, at the same time, extraordinarily good for them, and their future."

On Monday, Trump told the "Hugh Hewitt Show" that Iran would be hit "very hard tonight, and we're going to hit them hard tomorrow. And there's not a ⁠damn thing they can do about it."

The governor's office of Iran's Qeshm Island, on the Strait of Hormuz, said it was hit by a US projectile at around 7 pm on Tuesday, Iranian state media reported.

Meanwhile, a US projectile exploded near a water and electricity facility on Iran's Kish Island, the country's semi-official Tasnim news agency said.

State media also reported an explosion in Andimeshk in southern Khuzestan province, but later said it was a controlled explosion and not an attack.

Iran had earlier hit back by attacking a US Army 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.

In the early evening, Kuwait said its armed forces were engaging with "hostile" aerial targets, and the state news agency said sirens had sounded in the country. Bahrain's Interior Ministry also said sirens had been sounded.

The worsening attacks have 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.

The move to impose US fees had drawn sharp criticism.

The UN 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.

Germany's Hapag-Lloyd, the world's fifth-largest container shipping company, said it would be "fundamentally wrong."

Reuters