US Renews Iran Blockade, Oil Surges as Inflation Fears Return

The U.S. said on July 13 it will resume blockade operations against Iran at 4 p.m. Eastern time on July 14, or 5 a.m. in Seoul on July 15. The move effectively puts the two sides back on a war footing, three weeks after they signed a ceasefire memorandum of understanding.

The strait is effectively closed. President Donald Trump has insisted the Strait of Hormuz remains open, but shipping companies disagree. The Persian Gulf Strait Authority, or PGSA, an Iranian organization set up to control the waterway, has sent notices to vessels saying passage through the area is currently difficult because of U.S. military activity. Iran’s Islamic Revolutionary Guard Corps, or IRGC, has attacked ships leaving the strait through Omani waters. The United Arab Emirates said two of its merchant vessels were attacked by Iran on July 13, killing one person and injuring several others.

Will Trump’s 20% Transit Fee Become Reality

Trump’s proposal to impose a 20% transit fee is widely viewed as unlikely to be implemented as stated. The plan appears intended as a counter to Iran’s effort to collect charges in the form of war-risk insurance premiums.

A South Korean government official said the proposal was unlikely to be carried out because it would amount to the U.S. openly disregarding the right of transit passage under the United Nations Convention on the Law of the Sea. Vice President JD Vance and Secretary of State Marco Rubio have already said there should be no transit charges. After attending a Gulf Cooperation Council meeting in June, Rubio issued a joint statement rejecting attempts to impose tolls or fees or claim control over the strait. Trump, however, has repeatedly argued that the U.S. could charge for passage through the area, saying it is unfair for the U.S. to guarantee global freedom of navigation for free.

A 20% fee would be exceptionally high. At the height of the war, major insurers charged ships crossing the strait premiums of 10% to 20% of cargo value, but those rates had fallen to 1% to 2% in early July. If Trump’s proposal were applied, a very large crude carrier, or VLCC, carrying 2 million barrels would face an additional $32 million on a cargo worth about $160 million. That would erase the price competitiveness of Middle Eastern crude and almost certainly provoke resistance from Gulf oil producers.

The proposal has drawn criticism as a typical example of Trump-style security commercialism aimed at making countries that use the route bear more of the cost. Most of the crude oil and liquefied natural gas moving through the Strait of Hormuz is headed to Asia, including South Korea, China and India.

As the standoff drags on, prospects for a near-term easing of tensions are fading. Trump said on July 13 that he would launch a large-scale attack on Iran’s nuclear facilities. He also said the ceasefire memorandum carried little meaning and had been an agreement meant to test Iran.

“100% of Volumes Secured Through August”

The South Korean government has moved into emergency response mode. It plans to resume strategic oil stockpile swaps that were halted in late June and says it can raise its crude supply crisis alert again at any time after previously lowering it. In the refining industry, talk of a “September crisis” is already spreading. The concern is that if Middle East risks become prolonged and persistent, competition for crude supplies will intensify and cost pressures will climb further.

Still, the government said there is no immediate disruption to crude supply. The Ministry of Trade, Industry and Energy said at a Middle East briefing that domestic crude import volumes for July and August have been secured at more than 100% of the average for the same period a year earlier, or 87.5 million barrels a month. September volumes have also continued to rise and now stand at 76% of the level from a year earlier.

The ministry also said six tankers that safely passed through the Strait of Hormuz immediately after the ceasefire memorandum was signed on June 17 will arrive in South Korea sequentially by next week.

Lee Sang-eun, Washington correspondent / Kim Dae-hoon / Son Ju-hyung, reporters, Hankyung.com selee@hankyung.com