Crude oil surged by 10% during the trading session! The U.S. military has resumed its blockade on Iran. Trump said he will “hit hard” tonight and tomorrow, and has charged shipping for Strait cargo with a 20% fee.

Authors: Li Dan, Li Jia

The situation between the US and Iran escalated suddenly, the risk of passage through the Strait of Hormuz surged sharply, and international crude oil futures rebounded strongly.

According to Xinhua News Agency, on Monday, the 13th, U.S. President Trump said the United States would restore its naval blockade on Iran. According to CCTV News, Trump posted on his social media on Monday saying the Strait of Hormuz is currently open and will remain open regardless of whether Iran participates. The United States will reimpose a “blockade targeting Iran.” The measure applies only to Iranian vessels or customers, restricting their entry to and exit from the strait, while all other countries may use the strait fairly and openly. He also said the United States will charge a 20% fee on all cargo transported through the area, and that the relevant process and deployment work would start immediately.

In his social media post, Trump branded the above charges as “compensation” for the United States acting as the guardian of the strait. He wrote: “From now on, the United States will be regarded as the ‘guardian of the Strait of Hormuz’; as a guardian, based on ‘fairness,’ the United States will charge a 20% fee on all transported cargo, as compensation for the expenses necessary to maintain the safety and security of this world’s turbulent region.”

After Trump posted earlier on Monday during the early trading session of U.S. stocks, international crude oil rose further. WTI crude climbed above $75, with intraday gains expanding to 5%. Brent crude edged close to the $80 level and rose nearly 5%. The U.S. dollar index and U.S. Treasury yields rose in tandem. The S&P 500’s decline widened to 0.5%, while spot gold tumbled nearly 3%.

During the midday trading session of U.S. stocks on Monday, the U.S. Central Command confirmed that the U.S. military would restart the naval blockade against Iran beginning Tuesday the 14th at 4:00 p.m. Eastern Time, i.e., 4:00 a.m. Beijing Time on Wednesday the 15th. The rise in international crude oil had once expanded to nearly 10%. Iranian Foreign Minister Aragchi said Trump’s 20% charge rate for the Strait of Hormuz is “too much,” and he also claimed that Iran has always been the guardian of the Strait of Hormuz.

In the late trading session of U.S. stocks on Monday, according to Iranian media Tasnim, explosions were heard on Larak Island in Iran, located in the Strait of Hormuz. Explosions were also heard at the port of Abbas and at Konarak in southern Iran. After that, CCTV said that on the evening of the 13th local time, four explosions were heard to the east of the port of Abbas. After U.S. stock trading ended, CCTV further learned early on the 14th local time that three more explosions were heard again at the port of Abbas. The Iranian authorities did not determine the nature of the explosions.

In the late trading session of U.S. stocks, after the reports about explosions in the above Iranian areas were released, international crude oil remained up by around 9% intraday. After U.S. stocks closed on Monday, Trump said the United States will “strike” Iran tonight and tomorrow. With oil prices staying at high levels, Brent crude rose more than 10% compared with the close on Friday.

Afterward, Trump claimed that he believes an Iran agreement may be reached. He said, “I want compensation in the Strait of Hormuz. The United States provides protection for shipping in the Strait of Hormuz, and it will receive compensation from the countries that the U.S. has helped.”

After U.S. stocks closed on Monday, according to Xinhua News Agency citing Iranian Fars News Agency, on Monday late night a U.S. Air Force MQ-1 unmanned aerial vehicle was shot down over the Strait of Hormuz by Iran’s Islamic Revolutionary Guard Corps air defense system. Earlier on Monday, the U.S. Central Command disclosed on social media that last Sunday the U.S. military struck a submarine and a vessel repair facility at the naval base in the port of Abbas in Iran, which was the first time the U.S. military used armed unmanned surface vessels in real combat.

CCTV cited a post from the U.S. Central Command as saying that at Trump’s instruction, the U.S. military began continuous third-night airstrikes against Iran at 4:45 p.m. Eastern Time on Monday. It also said the operation would continue to impose heavy costs on Iran’s armed forces and weaken their ability to attack innocent civilians and commercial shipping in the Strait of Hormuz.

The U.S. military will start a maritime blockade of Iran in the time period on Tuesday in the U.S. and Europe

After Trump posted, the International Maritime Organization (IMO), under the United Nations, said it opposed charging ships transiting through sea routes, but would wait for more details. During the midday trading session of U.S. stocks, according to CCTV, the Joint Maritime Information Center, supervised by the U.S. Navy, said the U.S. military would start implementing a maritime blockade of all Iranian ports and Iran’s coastal regions at 20:00 on July 14 Greenwich Mean Time (4:00 a.m. Beijing time on July 15).

The blockade applies to all vessels, regardless of what flag they fly. The scope covers the entire coastline of Iran, including but not limited to Iranian ports and oil terminals. The blockade will not prevent neutral vessels from transiting through the Strait of Hormuz to non-Iranian destinations, or from sailing away from non-Iranian destinations. Humanitarian cargo shipments will be allowed to pass, but will be subject to inspection.

During the midday trading session of U.S. stocks, after the news of the U.S. naval blockade, oil prices’ gains widened further. WTI and Brent rose to above $78 and $83 respectively; intraday gains had reached 9.86% and 9.9% respectively, nearing 10%.

Although Trump said the fee plan would begin immediately for drafting and implementation, the White House did not provide further details about the proposal right away, including how it would be carried out or whether it had been discussed with U.S. allies. Commentators believe Trump’s statements intensified the dispute between the U.S. and Iran over whether this critical shipping corridor is open to traffic.

Previously, according to Xinhua News Agency citing Iranian media on the 13th, the spokesperson of the Hatam al-Anbia Central Headquarters of Iran’s armed forces said that day that the United States would never be allowed to interfere in the management of the Strait of Hormuz.

The spokesperson said Iran’s armed forces would strongly respond to the actions of U.S. forces entering designated lanes without authorization from Iran and disrupting the passage of merchant vessels and oil tankers. “The recent actions of Iran’s Islamic Revolutionary Guard Corps and the Iranian armed forces of the Islamic Republic are proof.”

Earlier on Monday, in a telephone interview with the U.S. Fox News Channel, Trump said the U.S. plans to control the Strait of Hormuz and should receive compensation for “guarding” this important waterway. He said, “We have guarded that strait for 50 years and have never been paid. We want compensation because we have put our personnel in danger.”

Iran says the southern route of the Strait of Hormuz is “unsafe”

Also, according to Xinhua News Agency, Iran’s embassy in the UK said on social media on the 13th that the southern route of the Strait of Hormuz is “unsafe, unreliable, and prone to accidents.”

The Iranian embassy in the UK said that in order to comply with the Memorandum of Understanding from Islamabad, Iran established a temporary maritime security corridor. The corridor has no technical or military obstacles and has been notified to the International Maritime Organization. However, “the United States is steering ships toward a dangerous southern parallel route. Not only is the legality of this route in question, it is also unsafe, unreliable, and prone to accidents.”

The Iranian embassy in the UK said that “military aggression” by the United States, such as attacks on Iranian ports, has made the Strait of Hormuz a highly tense and high-risk area.

After the Iran-U.S. memorandum of understanding was reached, the strait formed two transit routes: the northern route controlled by Iran and the southern route near the side of Oman. The U.S. military provides navigational assistance on the southern route.

On the early morning of the 12th local time last Sunday, the navy of Iran’s Islamic Revolutionary Guard Corps announced that, given the unsafe situation caused by illegal intervention by foreign forces, the Strait of Hormuz would be closed from this day onward until further notice and until the U.S. stops interfering in this region. The U.S. Central Command posted on social media on the morning of Sunday in U.S. Eastern Time, saying that passage through the Strait of Hormuz is “still ongoing.” Iran does not control the strait.

International Maritime Organization: Opposes collecting passage fees for straits used for international navigation

After Trump’s post, a spokesperson from the International Maritime Organization (IMO) said: “We have taken note of the relevant statements and are waiting for more details.”

The spokesperson said: “Our stance on the issue of fees has always been clear—we firmly oppose levying fees for passage through straits used for international navigation. Compulsory tolls only because ships transit through the strait are legally untenable.”

Media said shipping industry officials are concerned about the latest development in Trump’s talk of charging fees, saying that based on their assessment such measures would violate international law.

An industry official questioned Trump’s remarks this way: “How exactly can this make navigation safer? And what kind of assurances can it provide?”

Trump has notified Congress that the Iran conflict may have reignited

According to CCTV citing U.S. sources reporting on Monday the 13th, Trump has formally notified Congress that the Iran conflict has reignited. In a letter to the congressional leadership on the 10th, Trump wrote that on the 7th the U.S. military carried out “defensive strikes” against targets inside Iran.

It is understood that this letter further inflamed disputes between Congress and the White House. Although Congress in both the House and the Senate had previously voted to require the president to end the war or seek approval before further action, the White House insisted that Trump, as commander in chief of the armed forces, was acting within the scope of constitutional powers.