Published: · Severity: WARNING · Category: Breaking

US–China agree Strait of Hormuz must remain toll-free

Severity: WARNING
Detected: 2026-05-13T22:29:37.464Z

Summary

The US and China agreed that no country should levy shipping tolls in the Strait of Hormuz, according to the State Department. Amid an ongoing Iran war backdrop, this joint stance reduces the immediate risk of quasi-blockade pricing via transit fees and slightly lowers the tail risk premium in crude and tanker markets.

Details

  1. What happened: The US State Department reports that Washington and Beijing have agreed that no country should charge shipping tolls in the Strait of Hormuz. The issue was discussed between US Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi ahead of a Trump–Xi summit in Beijing. This is framed explicitly in the context of the current Iran war, where fears had grown that Iran or regional actors might seek to monetize or weaponize passage through Hormuz via new tolls or de facto extortion.

  2. Supply/demand impact: This is not a physical supply change but a reduction in perceived future cost and disruption risk. Hormuz handles roughly 20% of global crude and significant LNG flows from Qatar. Market fears had included scenarios where new tolls, backed by military leverage, could effectively raise freight and delivered crude costs, or even be used as a pressure tool to selectively disadvantage certain buyers. A rare US–China alignment against such tolls raises the political and military cost for any regional actor attempting this, thereby lowering the probability-adjusted cost of transit in forward curves.

  3. Affected assets and direction: The immediate price effect should be modest but directionally bearish for crude benchmarks (Brent, Dubai) and Middle East freight risk premia, as it slightly trims the extreme tail of Hormuz-disruption scenarios. LNG shipping risk premia from Qatar through Hormuz also ease at the margin. Tanker equities that had benefited from elevated risk pricing may see mild pressure. Currencies of Gulf producers (e.g., pegged GCC FX) are less directly affected; this is more about volatility compression in oil and freight than FX.

  4. Historical precedent: Statements on freedom of navigation in key chokepoints (e.g., US naval assurances in Hormuz or Bab el-Mandeb) have historically contributed to short-lived pullbacks in risk premia added during crisis spikes, though they rarely unwind the full move without corroborating de-escalation on the ground.

  5. Duration: The impact is mostly on near- to medium-term risk pricing rather than structural fundamentals. As long as the Iran war continues and there is no physical incident in Hormuz, this joint US–China stance should act as a ceiling on how high toll/closure fears can drive crude and LNG shipping premia, but any kinetic event in the strait would quickly overwhelm today’s signal.

AFFECTED ASSETS: Brent Crude, Dubai Crude benchmark, Qatar LNG-linked freight indices, VLCC and LNG tanker day-rates, Oil volatility indices (OVX), Middle East crude differentials

Sources

Related Coverage

WARNING

Russia Again Mass-Strikes Ukraine, Ignites Kremenchuk Oil Refinery

Between roughly 22:06 and 22:50 UTC on 13 May, Russia launched a large, complex strike package on Ukraine involving more than 100 Shahed/Geran drones and multiple Iskander ballistic and cruise missiles. Repeated impacts are reported in Kremenchuk, Poltava Oblast, with a large fire at the oil refinery, and fresh Iskander-K hits near Kozyn in Kyiv Oblast. The sustained targeting of Kremenchuk and renewed hits near the capital mark a significant escalation against Ukraine’s energy infrastructure with implications for regional fuel supply and war dynamics.
WARNING

Russia Masses Drones, Missiles; Hits Kremenchuk Refinery Again

Between 22:06 and 23:02 UTC on 13 May, Russian forces conducted a large, coordinated strike on Ukraine with over 100 Shahed/Geran drones and multiple Iskander ballistic and cruise missiles. The Kremenchuk oil refinery in Poltava Oblast was again hit by Iskander-M salvos, causing major fires, while additional Iskander-K missiles and unidentified missiles maneuvered over central Ukraine and impacted near Kyiv Oblast. The operation targets Ukraine’s energy and logistics infrastructure and may tighten regional refined product balances, with knock-on effects for global oil markets and European risk sentiment.
WARNING

Israel Forces Reportedly Cross Litani River, Open Deeper Lebanon Front

Around 23:00 UTC, reports indicate Israeli Egoz and Golani reconnaissance units have crossed the Litani River in southern Lebanon and established positions north of the river near Zawtar al-Sharqiyah. This marks a major escalation in the Israel–Hezbollah confrontation, breaching a long-standing de facto buffer and raising risks of a wider regional war. Concurrently, Russia is sustaining intense missile and drone strikes across Ukraine, including fresh hits on the Kremenchuk oil refinery and large Geran-2 drone swarms, further degrading Ukrainian energy infrastructure.
EASTERN EUROPE

Mass Russian Missile Barrage Pounds Kremenchuk Oil Facilities

Between 21:50 and 22:05 UTC on 13 May, multiple Russian Iskander‑M ballistic missiles struck the Kremenchuk area of Poltava Oblast, Ukraine, igniting major fires at what appears to be the city’s oil refinery. The attack followed earlier warnings of a high risk of missile launches from Russian border regions.
EASTERN EUROPE

UK Monarch Reaffirms Robust Ukraine Backing in Throne Speech

In a throne speech delivered on 13 May, King Charles III pledged that Britain will maintain unwavering support for Ukraine and strengthen its defense, energy, and economic security. The address underscored the UK’s continued commitment to NATO at a time of intensified Russian attacks.
GLOBAL

U.S. House Forces Vote on Major Ukraine Aid, Sanctions Bill

On 13 May, a bipartisan group in the U.S. House of Representatives secured 218 signatures on a discharge petition to force a floor vote on a comprehensive Ukraine aid and Russia sanctions package, overriding opposition from Speaker Mike Johnson and GOP leaders. The bill includes over $1 billion in security assistance and reconstruction measures.