U-turn averts potential spike in global oil prices as U.S. pivots to trade deals with Gulf allies

U.S. President Donald Trump has scrapped plans to impose a controversial 20% fee on cargo ships transiting the Strait of Hormuz, following mounting pressure from Gulf nations wary of its economic fallout.

The proposed levy had triggered alarm across global markets due to the strategic importance of the narrow waterway, which handles a significant share of the world’s crude oil and liquefied natural gas shipments. Analysts warned the move could disrupt international trade, inflate shipping costs, and drive up energy prices worldwide.

Announcing the reversal, Trump said Washington would instead prioritise expanding trade and investment partnerships with Gulf allies. He described recent talks with regional leaders as “productive,” adding that the new approach would foster long-term economic cooperation rather than strain it.

Despite backing off the shipping fee, the U.S. signalled it would maintain a strong security presence in the Gulf, particularly amid ongoing tensions with Iran. The administration emphasised that deeper economic engagement with regional partners would serve as a more sustainable alternative to the abandoned toll plan.

The decision is likely to calm global energy markets and reassure key oil-exporting nations that had feared the policy could destabilise one of the world’s most critical trade corridors.