United States President Donald Trump has pledged to use frozen Iranian assets to pay for any damage caused to ships and cargo in the Strait of Hormuz, a move that has drawn sharp condemnation from Tehran. Writing on his Truth Social platform on Thursday, Trump stated that any and all damages to ships, cargo, or related assets would be paid for by Iranian money that the United States has in its possession and controls. Trump described the action as the fair and equitable thing to do,
despite noting that the damages may be very substantial.
Tehran Warns of Dangerous Precedent
Iranian Foreign Minister Abbas Araghchi responded to the announcement on Friday morning via a post on X. Araghchi characterized the seizure of another country’s assets to pay for unrelated future claims
as an incendiary precedent.
He warned that when governments normalize the confiscation of assets, no one’s assets remain safe, and asserted that the ensuing chaos would not be pretty or peaceful.
Context of Frozen Assets and Failed Agreements
The U.S. government first froze Iranian funds in 1979 following the taking of U.S. citizens as hostages at the embassy in Tehran. While the exact total is not known, some estimates place the amount of frozen money belonging to Iran at approximately $100 billion, while other estimates range between $100 billion and $123 billion.
The status of these assets was a subject of a now-collapsed memorandum of understanding (MoU) signed in June between Washington and Tehran as a pathway to end the war. According to the terms of that agreement, specifically clause 11, the U.S. had committed to making all frozen or restricted Iranian financial resources fully available for use. Under that MoU, the two nations were to mutually agree on procedures for releasing these funds to be used by any final beneficiary designated by the Central Bank of the Islamic Republic of Iran.
Escalating Military Tensions and Infrastructure Threats
The dispute over assets coincides with a significant escalation in military hostilities. Since July 6, the International Maritime Organization (IMO) reports that Iranian forces have attacked at least a dozen ships in the Strait of Hormuz. In response, President Trump threatened on Wednesday to destroy one Iranian bridge or power plant—including those in or near the capital city of Tehran—every time Iran shoots at a ship in the strait using missiles, rockets, drones, or other weapons.
- U.S. Strikes: Washington completed its 13th consecutive night of strikes on Iran late Thursday. Earlier, U.S. Central Command (Centcom) conducted an 11th consecutive night of strikes targeting military logistics, aircraft hangars, and maritime capabilities.
- Iranian Retaliation: The Iranian army announced Friday that it launched drone attacks targeting U.S. military installations in Jordan (Al-Azraq Air Base) and Bahrain (Sheikh Isa Air Base), specifically targeting fuel tanks, accommodation facilities, and warehouses.
- Red Sea Conflict: Trump has also promised “major military punishment” for Iran and Houthi allies after Yemeni fighters struck two Saudi oil tankers in the Red Sea.
Economic Impact and Shipping Turmoil
The instability in the region has severely impacted commercial shipping and global energy markets. Ship tracking data from Reuters showed that the number of tankers crossing the Strait of Hormuz fell to just one on Thursday, the lowest level since May 7. The IMO noted that daily transits, which were over 60 in late June, dropped to fewer than 40 by the end of that month.
These disruptions have driven up oil prices, as nearly 34 percent of the world’s crude oil passed through the strait last year, according to the International Energy Agency. Consequently, average U.S. gas prices have risen to more than $4 per gallon, according to AAA.
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