Manish Pandey
Live reporter

Image source, Reuters

President Donald Trump has abandoned his threat of a 20% fee on cargo passing through the Strait of Hormuz, saying it will instead be replaced by trade deals with Gulf states.

Speaking in the White House, Trump said his decision was made after calls from those countries, adding he doesn't "like the concept of a fee".

That came after the US and Iran again exchanged more strikes overnight, with tankers in the Strait of Hormuz hit by Iran's Islamic Revolutionary Guard Corps, killing at least two crew members.

Iranian state media reported multiple explosions taking place near port cities during the day. Earlier, Iran said it had launched attacks against US sites in Bahrain and Jordan. A British expat living in Bahrain tells our security correspondent that strikes there left him "trembling".

Despite the security issues, one expert says some shipping operators may be willing to take the risk of crossing the strait, while another says the industry is making "hour by hour decisions" on whether to transit.

The US blockade on Iranian ports is scheduled to resume at 16:00 Eastern Time (20:00 GMT).

• We're now closing our live coverage - you can read more in our news story.

Oliver Smith
Senior business producer, BBC News

Dr Jorge Leon, an energy economist at Rystad Energy, has been tracking the amount of crude oil that has left the Strait of Hormuz since the conflict began.

He says that towards the end of June, up to 15 million barrels of oil were leaving the Strait of Hormuz every day, but that dropped to less than five million in the last week, and it’s falling further day by day.

“We see very, very limited traffic right now and that’s worrying,” he says.

But while he says the jump in the price of oil to $87 a barrel earlier today was “significant”, that price also reflects an expectation that both sides will de-escalate.

“I think that the market is recognising that $87 a barrel is much higher than what it was before, but it's not $120 per barrel. So I think that the market is putting out an important probability for this to be resolved in the coming days or weeks," he says.

Leon says that if it gets to "two or three weeks of no traffic at all, then price pressures will start accumulating again".

Trump is asked about whether he regrets lifting the blockade on Iran in light of it resuming strikes on ships in the Strait of Hormuz and the memorandum of understanding between the two countries falling apart.

The president responds that he doesn’t, that the Iranians are a "difficult people" and that he wanted to give the country's leadership a chance.

Trump adds that he believes Tehran’s disagreement with something in the deal led them to renewed strikes, saying “they shot first”.

The press conference has now ended.

Bernd Debusmann Jr
White House reporter

Donald Trump has now offered slightly more detail on his new plan for the Strait of Hormuz, which will see him drop his 20% fee on cargo passing through in exchange for Gulf countries investing in the US.

He says the decision was made after calls were made from the Gulf after the announcement of the fees.

Notably, Trump seems to now be on the same page as Secretary of State Marco Rubio, who previously said that the US does not believe any country should be able to toll shipping traffic through the strait.

"I don't like the concept of a fee," he said. "But at the same time, it's not fair we're protecting the strait for everybody."

Trump's perception that the US is bearing the brunt of global security issues is one that he voices regularly, particularly when it comes to the strait and Nato.

Yet another abrupt shift from Donald Trumppublished at 17:15 BST

17:15 BST

Sebastian Usher
Global affairs correspondent

Image source, Reuters

Just 24 hours ago, Donald Trump made his latest abrupt shift by declaring that from now on the US would be demanding hefty financial compensation for providing security for vessels transiting the Strait of Hormuz.

The announcement may have been more an indication of his growing frustration than a well wrought new strategy.

The Iranians mocked him, saying they heartily agreed with charging a fee but that they'd offer a fairer price.

Shipping agencies expressed their reservations.

And all the time, the exchange of fire between the US and Iran has only escalated, meaning that only a trickle of ships are currently taking the risk of transiting the strait.

And with that, oil prices have again risen sharply. So, now there's been yet another about-turn from President Trump.

Image source, Reuters

US President Donald Trump is speaking with Iraqi Prime Minister Ali al-Zaidi at the White House.

We'll bring you any remarks relating to the Iran conflict. You can also watch the stream at the top of this page.

Kuwait's army says it is confronting "hostile aerial targets" in its airspace.

"Any explosion sounds, if heard, are the result of air defence systems intercepting hostile attacks," the military says on X.

The US ally has repeatedly come under attack from Iran during the ongoing conflict.

The UN's maritime agency, the International Maritime Organization (IMO), says at least two people were killed and several others were injured as a result of the overnight attacks on tankers in the Strait of Hormuz.

Earlier, the UAE and Delhi reported that an Indian seafarer had died as a result of Tehran's strikes.

Now, the IMO says a second seafarer on the same ship (Al Bahiyah) was also killed. The ship was 13 nautical miles (24 km or 14.9 miles) from the coast of Oman.

Another vessel, Mombasa B, was also damaged by Iranian strikes. Fourteen seafarers were injured during last night's attack.

In a statement to the BBC, the maritime agency says it is working with authorities to "confirm the full circumstances" and demands an end to the "cycle of escalation".

The IMO says that since the start of the US-Iran war 17 seafarers have died as a result of hostilities in the strait.

Trump drops 20% fee in Strait of Hormuz - but for a pricepublished at 16:29 BST

16:29 BST

Bernd Debusmann Jr
White House reporter

Image source, EPA

Donald Trump's latest Truth Social post suggests that his proposed 20% fee on traffic through the Strait of Hormuz was - at least in part - a bid to secure investment in the US.

Foreign investment in the country has been a significant focus for his administration, and one that has cropped up periodically in dealings with foreign countries over the issue of tariffs.

While Trump has promised that these deals will be "massive" and will see factories and equipment pour into the US, there are very few details, and we have yet to hear from the Gulf states that he says will be involved.

The last line of his post - in which he says that Iran's days of killing protesters are "over" - is also something of a mystery.

Notably, pressure on Iran to make domestic reforms or improve its human rights records was absent from the 14-point Memorandum of Understanding that extended the ceasefire.

It is unclear how he plans to accomplish this, or pressure an Iranian regime that has survived the war largely intact despite the deaths of senior leaders.

We'll be hearing from Trump in the Oval Office shortly.

In his Truth Social post, Trump says the Strait of Hormuz is "open to ALL Ship traffic except for Iran — and that is because of their lying, violent, malicious leadership, which is taking them down the path of TOTAL DESTRUCTION".

He adds there will be a "full blockade" but only on ships "coming to and from Iranian ports, or carrying anything have to do with Iranian cargo".

Image source, EPA

Donald Trump says on Truth Social he has decided to "replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States".

"Those Investments will be MASSIVE but, at the same time, extraordinarily good for them, and their future," he writes on the platform.

We'll bring you further details from his post soon.

Maritime security expert Victoria Mitchell tells the BBC's World At One that the industry is making "hour by hour decisions" on when to transit to ensure safety for cargo, crew and vessels.

"Whilst it isn't that everything has stopped, certainly this most recent escalation has meant a reduction in the number of transits through the strait," Mitchell of firm Control Risks says.

With the central route closed, Mitchell says vessel owners will be talking to Iran about using their administered northern route as well as working with Oman and the US for the southern route.

She says there's "no like for like" alternative to the strait, but some states have some capacity to bypass it by using pipelines like Saudi Arabia's East-West pipeline.

"These are not able to support the same volume of oil, which was moving through the strait by seaborne routes. And they only allow for the states, Saudi Arabi, and the UAE to be using them because there's limited capacity."

The US and Iran have returned to "full-blown hostilities", according to Foad Izadi, professor of American studies at the University of Tehran.

Izadi says the memorandum of understanding (MoU) between the US and Iran was signed in a period of "distress" and that the US started violating the agreement on "day one".

"Pete Hegseth, the secretary of war, threatened to attack Iran five hours after Trump signed the agreement, which is against article one," Izadi tells the BBC World Service's Newshour.

"The United States started violating the MoU from day one, until today - when they attacked Iran last night," he says.

Izadi adds that Iran does not want to control the Srait of Hormuz, but is responding to the US's "illegal attacks" and its blockade of Iranian ports, which Izadi says "is an act of war".

Image source, Getty Images

UK Foreign Secretary Yvette Cooper has said she's spoken with US colleagues over the UK's opposition to tolls in the Strait of Hormuz.

Speaking to the Foreign Affairs Committee, Cooper said the "discussion" took place during the Nato summit last week.

"We were talking about that we could not end up with tolls and with a system on the Strait of Hormuz that would undermine the freedom of navigation and the law of the sea."

She added she felt there's currently an "escalation of rhetoric around the conflict itself and the putting on of pressure".

Cooper also blamed Iran for "an increasing of pressure on all sides" by attacking commercial shipping in the southern shipping route in Omani waters, saying the move "totally undermines the law of the sea".

Bernd Debusmann Jr
White House reporter

US President Donald Trump is scheduled to meet with new Iraqi Prime Minister Ali al-Zaidi at the White House in a few hour's time - a meeting in which the issue of Iran is likely to dominate discussions.

Trump publicly supported al-Zaidi to become Iraq's new PM after months of political deadlock following the country's parliamentary elections last year, and in April posted that his success was the "beginning of a tremendous new chapter" in US-Iraqi relations.

The US president is likely to use the meeting to push al-Zaidi to move to disarm Iranian-backed and affiliated militia groups.

While Iraq's government has given non-state armed groups until September to give up their weapons, several of them have said they won't, and experts have warned that government operations against them could lead to fighting.

According to US officials, these groups have attacked US diplomatic and military personnel and facilities more than 600 times, including drone attacks on the American embassy and military airfields.

This, in turn, has prompted US retaliatory operations against militia leaders and bases.

Image source, Reuters

Israel's Prime Minister Benjamin Netanyahu says Israeli retaliation against Iran will be "much more powerful" if it is attacked first.

"I will say it to the leaders of Iran: Do not count on things remaining quiet if you attack us," he says in a video published on his social media.

He warns that Israel's response will not be the same at the last time it was attacked by Iran, even though that was "already powerful enough".

"The days are over when someone strikes us and we don't strike them back twofold," he adds.

"We did this to the Axis of Evil in Iran, and we will continue to do so to anyone who harms us. That is what we do."

Nick Edser
Business reporter

While higher oil prices might be the most visible impact on the financial markets from the resumption in hostilities in the Middle East, there are other knock-on effects too.

The cost of borrowing for governments has been rising on worries that higher energy costs will increase inflation, which will lead central banks to raise interest rates to keep price rises under control.

In the UK, government borrowing costs have risen above 5% for the first time since May.

The 10-year bond yield - effectively the interest rate charged to the UK government for a 10-year loan - hit 5.04% on Tuesday morning before slipping back. In May, the rate had peaked at 5.17%, which was the highest level since 2008.

The UK is not alone in seeing higher borrowing costs, as bond yields for other European countries have also risen. However, the UK has often seen a bigger impact than elsewhere, which analysts put down to a more inflation-prone economy, together with speculation earlier this year over the leadership of the government.

The trend could be a problem for Andy Burnham, who is set to replace Sir Keir Starmer as prime minister on 20 July. Rising yields on bonds mean the government will have to spend more on interest payments.

The UK government is talking to the Trump administration about its plans to impose 20% tolls on all cargo through the Strait of Hormuz - something the UK is opposed to.

The prime minister's official spokeswoman says the "priority is stability and a return to the ceasefire between the US and Iran and we continue to work with our allies to support a long-lasting peace deal".

Toll-free navigation of the vital waterway "must now be restored to begin easing the severe economic impacts" felt across the UK and the world, she adds.

On whether the UK is making these representations to the Trump administration, the spokesperson says that "it's for the US to set out the exact details of the proposals".

The government is "in touch with the US as you would expect, as we always are, on official channels, diplomatic channels to find out the intended scope of it and those conversations are happening", she says.

She adds: "We have always said the Strait of Hormuz should be reopened in line with international law and without tolls or charges that could further disrupt global trade."

Once again, Iran is playing a weak hand surprisingly wellpublished at 13:39 BST

13:39 BST

Frank Gardner
Security correspondent

Image source, Reuters

Although totally outmatched by the US militarily, Iran is achieving some strategic advantage over its adversary.

It’s doing this by yet again making the Strait of Hormuz a dangerous place to transit - unless ships abide by its new rules and sail by the northern route, to be inspected and then possibly having to pay a fee.

At the same time Iran is meting out nightly punishment to America’s Arab allies in the region for hosting its bases. Iran seems to have no shortage of drones and missiles to fire at them.

A renewed US naval blockade will hurt Iran’s already struggling economy.

But Iran knows that a paralysed strait will also impact the rest of the world, with oil price hikes as well as Donald Trump’s fortunes at the mid-term elections in less than four months’ time.

For those just joining us, here's a summary of the latest developments:

• Explosions have been reported in multiple Iranian cities, including the port city of Bushehr, the site of a civilian nuclear power plant, according to state media outlets
• Iran says it struck two tankers in the Strait of Hormuz, which the UAE Ministry of Defence has condemned as "brazen", saying an Indian seafarer was killed. Our weapons analyst explains what this means for the battle of control
• Another tanker operated by Stolt shipping caught fire after it was hit by an "explosion of an unidentified external device" off the coast of Oman. Crew are all safe and accounted for, the firm says
• Iran and the US continued to exchange strikes overnight, with Iran saying it targeted US military facilities in Bahrain and Jordan. A British expat living in Bahrain tells our security correspondent that strikes there left him "trembling"
• On Monday Donald Trump announced the US would reinstate a naval blockade of Iranian ports and impose a 20% charge on all cargo shipped through the Strait of Hormuz. Our Chief international correspondent explains why the fee is costly for negotiations