President Donald Trump’s Iran peace plan is drawing inspiration from one key constituency: the oil industry.
Oil company leaders are coming to the White House, Secretary of State Marco Rubio and Vice President JD Vance to oppose allowing Iran to impose tariffs through the Strait of Hormuz as a condition for peace talks, said one industry consultant who did not want to be named to discuss relations with the administration.
“Hell yes,” this person said when asked if officials were contacting the White House to oppose the Hormuz tariff. “We didn’t have to do that before – and I thought we won the war. Anywhere you can get dominance, you ask, what do you think?”
Response management officials were giving industry representatives “no worries,” this person added. “It’s like, ‘Yeah, okay, we’ll consider it.'”
Oil industry representatives met with senior staff at the State Department on Wednesday morning to express their concerns, said one person who said they attended the meeting.
Among their points: Accepting Iran’s request would add $2.5 million per shipment in tariffs and higher insurance rates, a cost that would be passed on to consumers. Giving Iran control of Hormuz could set a precedent for countries like Singapore and Turkey to impose tariffs on important trade routes through the Straits of Malacca and the Bosporus. And paying the tax could put companies at legal risk for violating sanctions to Iranian officials.
Companies were also expressing their concerns directly with Trump, but more gently, added this person, who did not want to be named because they were not authorized to speak to the media.
“The president is very concerned about the legacy and the decision on the success of this war so pushing the president right now seems like a risky proposition,” this person said. “But the White House is hearing from the industry despite the difficulty of negotiations.”
A White House spokeswoman did not directly answer questions about whether the administration was hearing from industry representatives or how it would address their concerns, instead referring to a Wednesday afternoon news conference where White House Press Secretary Karoline Leavitt said the administration was working with a “more sensible” set of Iran proposals.
Iran “provided a much more reasonable and completely different plan than was briefed to the president and his team,” Leavitt said during a press conference, without saying what had changed in the plan. “The President’s red lines, which are the end of Iran’s uranium enrichment, have not changed. And the idea that President Trump would accept Iran’s wish list as a plan is absolutely absurd.”
Vance’s office and the State Department did not immediately respond to requests for comment. Vance is heading to Islamabad to help negotiate, Leavitt said during a press conference.
With a fifth of the world’s oil supply dependent on Hormuz to reach markets, leaving Iran in control of which ships can enter and leave would add significant costs — and legal liability — to companies that have long enjoyed free passage through the waterway.
Iran already demands tolls be paid in yuan or cryptocurrency for oil tankers crossing the strait,according to media reports. Trump on Tuesday said the US would use Iran’s 10-point plan – which calls for collecting $2 million in tariffs on each ship – as the basis for a permanent ceasefire.
“I expect a lot of pushback, and not just from the oil industry,” said Jason Bennett, a lawyer focused on energy and international law at Baker Botts. Hormuz “is an open international waterway. To this day, Iran’s legal right to control the Strait of Hormuz has not been recognized. I don’t see anyone accepting that.”
TrumpTuesday he saidThe United States was “very far along with a specific Agreement on Long-Term PEACE with Iran, and PEACE in the Middle East,” adding “We received a 10-point proposal from Iran, and we believe it is a workable basis for negotiation.”
Trump, apart from arguing against Iran to collect tariffs, has publicly insisted that the USmay form a “partnership” in the operation.
“It’s an idea that the president has floated,” Leavitt said at a press conference Wednesday about Trump’s idea of sharing tax revenue with Iran. “And it’s something that will continue to be discussed over the next two weeks. The president’s immediate priority is the reopening of the Straits without any restrictions, whether through taxes or otherwise.”
Even after the ceasefire was announced late Tuesday, traffic through Hormuz remained at a standstill, said Matt Smith, a commodity analyst with ship-tracking firm Kpler. Iranclosed the Strait again on Wednesdayafter Israel attacked its ally Lebanon.
Foreign diplomats were also raising concerns as much as they could with the White House, which, they have complained, has not been very interested in their views so far.
“Will the future be Russia’s tariffs in the Arctic? China’s tariffs in the South China Sea?” said an Asian diplomat based in Washington. “My guess is that maybe (there will be) some kind of global protest, especially the users of the Straits.”
Some diplomats worry that Iran, if left to fend for itself, could impose tariffs on some ships and allow passage of others that do so for political favors. A second Washington diplomat told POLITICO that “seven or more ships” flying the Malaysian flag were able to pass through the Strait “free of charge.”
“Malaysia has always been vocal against Israel, before this whole Hormuz situation, so Tehran probably sees them as a friendly country,” the diplomat said. “This, along with neutrality in the strikes by the United States and Israel, probably helped a lot. Surrounding and maintaining good relations with everyone, even if the West doesn’t like them very much, brings benefits when things get difficult like this.”
The Malaysian embassy did not respond to a request for comment.
Many shipping companies will not pay the tax, calling it unsustainable in the long run.
“A transit fee of US$2 million per ship from Iran’s ten-point program represents more potential for fraud,” said Arthur Leichthammer, a fellow at the Berlin-based Jacques Delors Center. “That would be a very expensive deal – politically and economically.”
Tom Schmidtgen contributed to this report.
