US-Iran Strait of Hormuz Crisis: Oil Surges 5% as Trump Imposes 20% Fee

Escalation at the Strait of Hormuz

On July 13, 2026, the United States and Iran escalated their military confrontation over the Strait of Hormuz, a critical global energy chokepoint. President Donald Trump announced the reinstatement of a naval blockade of Iranian ports and declared the U.S. the 'Guardian of the Hormuz Strait,' imposing a 20% fee on all cargo shipped through the waterway. The announcement sent Brent crude oil prices surging over 5% to $79.37 a barrel, while global stock markets tumbled amid fears of prolonged supply disruption and renewed inflation.

The Strait of Hormuz, a narrow waterway between the Persian Gulf and the Gulf of Oman, handles roughly one-fifth of the world's oil shipments. The Strait of Hormuz geopolitical tensions have now reached a boiling point, with both sides exchanging heavy drone and missile strikes over the weekend. Iran retaliated against U.S. strikes by attacking American military facilities in Bahrain, Kuwait, Oman, Qatar, and Jordan, while the U.S. struck approximately 140 Iranian military targets, including air defense systems, radar sites, and missile capabilities.

Background: A Fragile Cease-Fire Collapses

The current escalation follows the near-total collapse of an interim cease-fire deal signed in June 2026. The conflict originally erupted on February 28, 2026, when the U.S. launched a military campaign against Iran. Since then, thousands have been killed, primarily in Iran and Lebanon. The cease-fire, brokered through international mediators, had offered a glimmer of hope for de-escalation, but mutual accusations of violations quickly eroded trust.

Iran accused the U.S. of violating the memorandum of understanding, while the White House blamed Iran for attacking commercial vessels in the strait. On July 11, Iran declared the Strait of Hormuz closed to unauthorized vessels and warned that any ship entering without permission risked being hit. Ship-tracking data showed only six vessels crossed the strait on Sunday, the fewest in five weeks, compared to roughly 130 daily transits before the war.

Trump's 'Guardian of the Strait' Announcement

The 20% Fee Proposal

In a series of Truth Social posts, President Trump declared: 'The United States will become THE GUARDIAN OF THE HORMUZ STRAIT. We will provide protection for all vessels transiting the strait in exchange for a 20% fee on all cargo shipped through the waterway.' The proposal immediately drew sharp criticism from international shipping bodies and legal experts. The U.N. International Maritime Organization rejected the fee, stating there is no legal basis for tolls on international waterways.

Under international law, the Strait of Hormuz is an international waterway guaranteeing free passage rights. Legal experts noted that typical shipping fees amount to only 2-3% of cargo value, making a 20% charge potentially unaffordable for many shippers. However, some suggested a voluntary convoy system, where shippers choose to pay for U.S. Navy protection, could comply with international law.

Military Strikes Intensify

The U.S. Central Command confirmed it carried out dozens of strikes on Iran to 'degrade its ability to attack vessels.' Iran's Islamic Revolutionary Guard Corps (IRGC) responded by launching missiles and drones at U.S. logistics centers in Oman's port of Duqm, Qatar's Al Udeid airbase, and military installations in Kuwait, Bahrain, and Jordan. Both sides reported casualties, though independent verification remains difficult.

Iran's foreign minister countered Trump's announcement, asserting that Iran controls the strait and calling the 20% fee excessive. The IRGC warned that any U.S. moves to enforce the blockade would be 'strongly contested' and accused Washington of jeopardizing global oil and gas supplies.

Global Economic Shockwaves

Oil Prices and Stock Markets

Brent crude jumped $3.10 to $79.11 a barrel on Monday, while West Texas Intermediate (WTI) rose to $74.32. The rally revived inflation fears ahead of key U.S. economic data. Global stock markets fell sharply, with South Korea's Kospi index dropping 8% and chipmakers like SK Hynix plunging 15%. Gold also slipped 1.4% to $4,083 an ounce as higher oil prices raised expectations that central banks may need to hike interest rates to combat inflation.

The OPEC cartel lowered its 2026 global demand forecast for the third consecutive time, citing the conflict's impact on economic growth. Analysts expect Brent to remain in the upper $70s through August-September, though a repeat of earlier price spikes is considered unlikely due to slow demand recovery and increased supply from stranded-tanker releases and OPEC+ quota expansions.

Impact on Import-Dependent Nations

For countries like India, which imports 85% of its crude oil, sustained price increases could widen the current account deficit and pressure the rupee. Japan, South Korea, and many European nations also rely heavily on Middle Eastern oil transiting the Strait of Hormuz. The global energy supply chain disruptions are already forcing governments to consider emergency reserves and alternative supply routes.

Shipping companies are rerouting vessels around the Cape of Good Hope, adding weeks to transit times and significantly increasing costs. The decline in strait traffic—from 130 vessels daily before the war to just six on Sunday—illustrates the severity of the disruption.

International Reactions and Legal Challenges

The U.N. warned that a return to full-scale hostilities would have catastrophic consequences for the region and the global economy. Gulf nations, while condemning Iran's attacks, have expressed concern about being drawn into a broader conflict. Some have advised residents to stay indoors as missile strikes continue.

Legal experts questioned the feasibility of Trump's fee proposal. 'International law is clear: the Strait of Hormuz is an international waterway. No single nation can unilaterally impose tolls,' said a maritime law expert quoted by CNN. Historically, similar fees were charged by Denmark for passage through the Øresund from the 1400s to the 1800s, a practice eventually ended by American intervention.

Senator Lindsey Graham (R-SC), a key foreign policy voice, died at age 71 after a brief illness, as reported on the same day, further shifting the political landscape in Washington. Meanwhile, the US-Iran military escalation 2026