"The damages would be paid for by Iranian Money that the United States has in its possession, and controls." — President Donald Trump
Tensions between the United States and Iran have escalated following a series of military exchanges and a proposal by US President Donald Trump to use frozen Iranian assets to compensate for damages to ships and cargo in the Strait of Hormuz. Both sides have reported strikes and retaliatory actions, with the situation impacting regional security and global oil markets.
Trump's Proposal on Frozen Assets
US President Donald Trump stated that frozen Iranian assets held by the United States would be used to compensate for damages to ships and cargo in the Strait of Hormuz. Writing on Truth Social, Trump said the damages would be paid for by "Iranian Money that the United States has in its possession, and controls."
Iranian Foreign Minister Abbas Araghchi criticized the proposal, writing on X that seizing another country's assets to pay for future claims sets an incendiary precedent. He warned that normalizing confiscation could lead to instability.
The United States has held frozen Iranian assets since 1979, following the hostage crisis at the US embassy in Tehran. Estimates of the total amount exceed $100 billion.
Background: Ceasefire Agreement and Breakdown
In June, the US and Iran signed a 14-point Memorandum of Understanding (MOU) to halt military operations and reopen the Strait of Hormuz, with a 60-day timeline to end the war. Point 11 of the MOU stated the US would make available frozen Iranian funds.
Three weeks later, Trump declared the ceasefire over after Iranian attacks on ships and US strikes in response. Trump also vowed "major military punishment" against Iran for Houthi attacks and told Axios he was considering restarting major combat operations with strikes "bigger than ever before."
Recent Military Exchanges
On Thursday night, the US military carried out strikes targeting Iranian military command centers, drone storage facilities, communication networks, coastal surveillance sites, and maritime capabilities, according to US Central Command.
Iran announced it carried out drone strikes on US military facilities in the Middle East, retaliating for what it described as the 13th consecutive night of American attacks on Iran. Explosions were reported along Iran's Gulf coast and in western, northern, and central areas. Iranian state media reported four killed and five injured in an attack in the southwest.
Iran later announced strikes on US-allied Kuwait. Sirens sounded in Bahrain and Jordan. A drone crash at Iraq's Erbil International Airport caused a temporary flight suspension; flights have since resumed.
The Iranian army announced new drone attacks on US military installations in Bahrain and Jordan.
Impact on Shipping and Oil Markets
Ship tracking data showed only one tanker crossed the Strait of Hormuz on Thursday, the lowest level since May 7.
Concerns over new threats to shipping in the Red Sea from Yemen's Iran-backed Houthis have pushed crude oil prices back above $100 per barrel, the highest since May.