By: AGBI

Oil prices rose to a one-month high on Tuesday after President Donald Trump said the US would reinstate a blockade of Iranian vessels in the Strait of Hormuz, and both sides renewed strikes in a fresh escalation of tensions.

Brent crude futures jumped 1.1 percent to $84.25 in early Tuesday trading, while US West Texas Intermediate contracts were 1.6 percent higher at $79.37.

Oil prices fell after a memorandum of understanding was signed between Washington and Tehran in mid-June, but have risen 15 percent so far this month.

Trump floated the latest plan for the Strait of Hormuz on social media and in interviews with US TV channels on Monday. Skirmishes between Iran and the US over control of Hormuz intensified over the weekend.

The president said the US would collect 20 percent “on all cargo shipped” through the strait as reimbursement for providing security.

“We’re going to be reimbursed, because the other nations are very wealthy,” he told Fox News’ Fox and Friends programme in comments reported by Reuters. “They’re on our side, and we can’t be expected to do that for nothing.”

US Central Command is set to enforce the blockade again on Tuesday, covering “the entirety of the Iranian coastline to include but not limited to Iranian ports and oil terminals,” the Joint Maritime Information Center said in its latest alert.

US forces struck Iran for the third night in a row, targeting military sites across the country, Central Command announced.

The latest US strikes have targeted Iranian military facilities, while Iran has focused on US bases in Bahrain and Kuwait, and other sensitive installations in Oman as well as Saudi Arabia and Yemen.

The UAE on Tuesday morning condemned an attack on two oil tankers transiting the strait within Omani territorial waters that killed one Indian crew member and injured eight others.

A spokesperson for the UN’s International Maritime Organization (IMO) said the group was aware of Trump’s most recent threats and was “awaiting more details,” according to Reuters.

“IMO stands firmly against charging fees for passage through straits used for international navigation,” the spokesperson said. “There is no legal basis through which to introduce mandatory tolls simply to transit through a strait.”

Iranian foreign minister Abbas Araghchi wrote on X that Iran has always been the “guardian” of Hormuz and “will remain so FOREVER”.

Trump’s fee plan for Hormuz is unlikely to become reality, according to Kristian Coates Ulrichsen, a fellow for the Middle East at the Baker Institute for Public Policy, “not least because of the precedent it would set, the fact that regional partners are unlikely to support it, and senior US officials have been saying such a toll is impermissible”.

“In my view, the president’s intervention today is an attempt to increase the pressure on Iran and try to regain the initiative in the battle of competing narratives and political will over the memorandum of understanding signed in June,” he told AGBI.