Report: U.S. Offered Iran Billions to Drop Strait of Hormuz Tolls

Iran has rejected a U.S. proposal to unfreeze billions of dollars in exchange for ending fees on ships passing through the Strait of Hormuz, The Wall Street Journal reported today (Thursday). In addition, according to the report, Iran has escalated its threats and warned that it will attack any vessel that does not use a route approved by Tehran.

U.S. envoys Jared Kushner and Steve Witkoff held an urgent round of talks this week in Doha with Qatari mediators, in an effort to resolve the crisis in the Strait of Hormuz and prevent it from being paralyzed. According to sources familiar with the details, the U.S. presented Iran with a clear offer: give up its claim to control the strait and cancel the toll payments, in exchange for the release of billions of dollars in frozen funds.

Under the agreement signed last month, Iran was supposed to gain access to part of the $100 billion in assets frozen abroad. The talks initially moved toward the release of $6 billion being held in Qatar, but Iran’s decision to block the strait delayed the move. An infusion of foreign currency is seen as vital for Iran’s economy, which has been suffering from runaway inflation after years of sanctions.

Upon his return from Doha, Deputy Foreign Minister for Legal and International Affairs and Iranian mediator Kazem Gharibabadi said that the Strait of Hormuz is "under Iran’s command," not under the command of the U.S. administration. Gharibabadi added that Tehran will not give up its demand to collect fees from vessels crossing the strait.

Last week, Iran renewed its attacks on ships after Oman organized an alternative transit route without receiving Tehran’s approval. That led to a wave of counterattacks by the U.S., until both sides agreed to stop the fighting and return to the negotiating table.

The crisis has dealt a major blow to shipping traffic through the strait. According to data from analytics firm Kpler, daily ship traffic through the strait dropped to just 43 vessels last Wednesday, down from 75 vessels the week before. For comparison, before the crisis broke out, more than 100 ships a day passed through the strait. The sharp decline is having a direct impact on global supply chains and energy prices.