Oil roars to a five-year high as Trump taxes the Strait of Hormuz
A 9.5 per cent oil spike is set to squeeze fuel prices and rattle markets after Donald Trump declared a toll on the strait the US had called Iran illegal for threatening.
Oil has surged to its biggest single-day gain in five years after Donald Trump moved to tax and blockade the Strait of Hormuz — the same waterway the United States has spent months insisting no country has the right to charge for.
Brent crude, the global benchmark, jumped about 9.5 per cent to trade above US$83 a barrel overnight, its largest one-day rise since May 2020. The US benchmark, WTI, topped US$78.
The trigger was a Truth Social post.
Trump declared the United States the “Guardian of the Strait of Hormuz” and said it would charge a fee of 20 per cent on the value of all cargo shipped through the waterway, to reimburse America for the cost of securing it.
In the same post he said the US would reimpose a naval blockade of Iranian ports — the “Iranian Blockade,” which he said would stop only Iranian ships and customers while other nations passed freely.
US Central Command said the blockade begins at 4pm US Eastern time on Tuesday.
There is a sharp reversal buried in the toll.
For the length of this crisis, Washington’s position has been that no country may charge for passage through Hormuz, and that it was an illegal outrage for Iran to suggest it would.
Trump is now proposing exactly that — a levy on every vessel, at 20 per cent.
The scale is enormous. At current prices, a 20 per cent charge would cost around US$32 million for a single supertanker. Iran, when it floated transit fees, was said to be charging up to US$2 million.
The move follows the collapse of what remained of the US–Iran ceasefire.
Iran’s Revolutionary Guard hit a Cyprus-flagged container ship, the GFS Galaxy, in the strait on Sunday, damaging its engine room and leaving one crew member missing.
The US responded with strikes on dozens of Iranian air-defence and coastal radar sites. Iran fired on American allies across the Gulf and again declared the strait closed — a claim the US rejects.
Roughly a fifth of the world’s seaborne oil and gas normally moves through Hormuz. Transits have fallen more than 50 per cent week on week.
For Australia, the exposure runs through the oil price, and the sharpest edge is at the bowser.
The country holds fuel reserves equal to about 36 days of petrol, 34 days of diesel and 32 days of jet fuel — well short of the 90 days the International Energy Agency recommends its members keep.
The Reserve Bank has already warned that a sustained energy shock could unanchor inflation expectations and force interest rates higher.
The International Monetary Fund has cut its 2026 global growth forecast to 3 per cent, citing the Middle East conflict, and its outlook assumed the strait would reopen from mid-July.
Instead, it is closing further.
Trump has left the door open to talks if the fighting settles. For now, the direction is the other way — and the oil price is moving with it.