Report: US offers to unfreeze Iran funds to keep Hormuz open

Wall Street Journal reports Washington discussed releasing $6 billion in frozen Iranian funds, but talks suffered a setback after Tehran insisted ships use its approved routes through the Strait of Hormuz or face a ‘forceful response’

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The Trump administration has offered to unfreeze Iranian assets in an effort to persuade Tehran to abandon plans to charge tolls on ships passing through the Strait of Hormuz, the Wall Street Journal reported Thursday, citing people familiar with the matter, as Iran issued a new threat against tankers that fail to follow its approved routes through the vital waterway.
According to the report, negotiations had initially advanced toward the release of $6 billion in frozen Iranian funds held in Qatar, but Iran’s decision to block the strait and insist on barring vessels from routes not approved by Tehran has set back the process.
Mojtaba Khamenei, Donald Trump and the Strait of Hormuz
Mojtaba Khamenei, Donald Trump and the Strait of Hormuz
Mojtaba Khamenei, Donald Trump and the Strait of Hormuz
(Photo: Stringer/Reuters, Anna Moneymaker / GETTY IMAGES NORTH AMERICA / AFP)
The U.S. is now reviewing an Omani proposal under which maritime services in the Strait of Hormuz would be paid through a fund financed by voluntary donations, the sources said. Iran has so far rejected the proposal.
Iran’s joint military command warned Thursday that all oil tankers moving through the Strait of Hormuz must use its approved routes or face a “forceful response,” ratcheting up tensions again over a waterway crucial for international energy supplies.
The strait, the narrow mouth of the Persian Gulf, has emerged as one of the top issues in negotiations seeking a permanent end to the Iran war. The statement from the Khatam al-Anbiya military command, reported by Iranian state television, came after both U.S. and Iranian diplomats met with mediators Wednesday in Qatar.
It was not immediately clear what sparked the threat from Iran. However, U.S. Central Command issued a statement about a meeting with officials from Middle Eastern nations in Bahrain, saying “leaders underscored their shared commitment to the free flow of commerce through” the strait.
That phrase appears to have angered Iran, which is preparing for the funeral that begins this weekend for the late Supreme Leader Ayatollah Ali Khamenei, who was killed in the war’s first moments in February.
“Any failure to comply, deviation from the designated route, or disregard for the navigation protocols of the Islamic Republic of Iran in the Strait of Hormuz will be met with an immediate and forceful response from the armed forces, endangering the security of the violating vessels,” the Iranian statement said.
It also said the continued presence of U.S. fighter jets over the strait “causes insecurity in this waterway and threatens regional security.”
“Any attempt by the United States to interfere in security matters or any disruptive action in the Strait of Hormuz will be considered a threat to Iran’s national sovereignty and will be met with a rapid and decisive reaction,” the warning added.
 The Strait of Hormuz
 The Strait of Hormuz
The Strait of Hormuz
(Photo: AP)
Iran and the United States agreed as part of an interim deal to allow ships to pass without paying charges for 60 days. But Tehran insisted it must control vessel routes and later charge fees for passage, upending decades of practice in the waterway.
In a report apparently aimed at bolstering Tehran’s claims to control the strait, Iranian state television said this week that a foreign ship got stuck in the waterway after ignoring instructions from Iran’s Revolutionary Guard Corps. However, the vessel’s shape, reported location and other details indicate the ship is tied to Iran and appears to have been stranded for months.
The U.S. and many Gulf Arab states say they will not agree to Iran charging for passage through the strait. An effort by Oman and a United Nations agency to launch a new route near Oman’s shore sparked attacks across the Middle East last weekend, highlighting the tensions.
Despite the escalation, Wednesday’s talks saw “positive progress,” Pakistani Foreign Ministry spokesperson Tahir Andrabi said. He told journalists that Pakistan hoped the next round of talks would be scheduled as soon as possible after Khamenei’s funeral.
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