US Plans to Use Frozen Iranian Assets to Cover Shipping Damage as Strikes on Iran Continue

Published: 24 July 2026 | The English Chronicle Desk | The English Chronicle Online

The United States has announced that it intends to use frozen Iranian assets under its control to compensate for damage caused to commercial ships and cargo operating in and around the Gulf, marking a significant escalation in its economic response to the widening conflict with Tehran.

President Donald Trump made the announcement as American military operations against Iranian targets entered their 13th consecutive night, while attacks linked to Iran-backed Houthi forces continued to threaten some of the world’s busiest maritime trade routes. The declaration introduces a new dimension to the confrontation by linking military and economic retaliation, raising fresh legal and diplomatic questions over the future of billions of dollars in Iranian assets frozen under US sanctions.

In a post on his Truth Social platform, Trump stated that any future damage inflicted on ships, cargo or related maritime assets would be compensated using Iranian funds held by the United States.

“Please let this statement serve to represent, until further notice, that from this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money that the United States has in its possession, and controls,” the president wrote.

The announcement came as the conflict between Washington and Tehran continued to intensify across several fronts. American forces carried out another wave of airstrikes targeting Iranian military infrastructure, including facilities near the strategic port city of Bandar Abbas and locations on Qeshm Island, an area hosting naval assets and drone capabilities close to the Strait of Hormuz. Iranian state media also reported explosions in other military-linked regions, although officials have released limited information regarding casualties or the extent of the damage.

The latest military action follows growing concerns over the security of global shipping routes. The Strait of Hormuz remains one of the world’s most strategically important waterways, carrying a significant share of international oil exports each day. At the same time, the Bab el-Mandeb Strait at the southern entrance to the Red Sea has become another flashpoint after Yemen’s Iran-backed Houthi movement threatened to disrupt maritime traffic.

Earlier this week, the Houthis claimed responsibility for attacks on two Saudi oil tankers travelling through the Red Sea, warning they would continue targeting vessels linked to Saudi Arabia. The attacks heightened fears of further disruption to international trade and energy supplies, sending oil prices sharply higher and forcing some shipping operators to reconsider routes through the region.

President Trump has directly blamed Iran for the Houthi attacks, arguing that the Yemeni group acts as a proxy for Tehran. He warned that any future attacks on commercial shipping would trigger “major military punishment” against both the Houthis and Iran itself.

Washington has increasingly linked its military campaign to protecting international shipping lanes, arguing that freedom of navigation through the Gulf and the Red Sea is essential for global economic stability. The administration says repeated attacks on commercial vessels threaten energy markets, international commerce and the security of allied nations across the Middle East.

Iran has reacted sharply to Trump’s proposal.

Foreign Minister Abbas Araghchi condemned the suggestion that frozen Iranian assets could be confiscated to pay compensation claims, describing it as an unprecedented and dangerous move.

Writing on social media, Araghchi warned that using one country’s frozen assets to satisfy unrelated future claims would establish what he called an “incendiary precedent.”

He argued that if governments begin routinely confiscating sovereign assets to settle political or military disputes, confidence in international financial systems could be severely undermined. According to Tehran, such actions would erode legal protections surrounding sovereign property and create uncertainty for countries holding foreign reserves overseas.

The proposal also raises significant legal questions.

Frozen foreign assets are generally held under sanctions regimes rather than permanently seized. While governments may restrict access to those funds, converting them into compensation payments often requires specific legal authority and, in many cases, court proceedings or international agreements.

Legal experts note that attempts to permanently confiscate sovereign assets have historically faced complex legal challenges, particularly when assets belong to central banks or state institutions protected under international law.

Although the Trump administration has not yet outlined precisely which Iranian assets would be used, billions of dollars linked to the Iranian government remain frozen under various US sanctions programmes imposed over many years.

The Treasury Department has already indicated that it has been examining options for using Iranian assets to support regional recovery efforts following attacks attributed to Tehran and its allied groups. Officials have reportedly sought assessments from Gulf allies regarding infrastructure damage and reconstruction costs resulting from the ongoing conflict.

The military confrontation continues to expand geographically.

American officials say recent operations have focused on degrading Iran’s ability to threaten maritime traffic, particularly around the Strait of Hormuz, through which roughly one-fifth of the world’s oil and gas supplies normally pass.

Meanwhile, explosions were reported near a US military base in northern Iraq shortly after another night of American strikes inside Iran, highlighting concerns that the conflict could spill further across the region. Iraqi leaders have renewed calls for restraint while attempting to prevent their territory from becoming a launching point for attacks against neighbouring countries.

The conflict has also placed considerable pressure on global energy markets.

Brent crude prices have climbed above the psychologically significant $100 per barrel mark amid fears that sustained attacks on shipping or the closure of strategic waterways could disrupt international oil supplies. Several shipping companies have reportedly begun rerouting vessels around Africa to avoid high-risk areas, increasing transport costs and delivery times for global trade.

Economists warn that prolonged instability in the Gulf and Red Sea could contribute to higher fuel prices, increased inflation and renewed supply chain disruptions affecting businesses and consumers worldwide.

International reaction to Trump’s latest announcement has been cautious.

Several governments have expressed concern that any confiscation of sovereign assets could have broader consequences for international financial governance. Although Western allies continue to support efforts to protect commercial shipping from attacks, legal scholars argue that the seizure of state-owned assets for compensation purposes could encourage reciprocal actions by other governments in future disputes.

Financial markets are also closely watching developments, particularly because sovereign asset protections play a central role in maintaining confidence in global banking systems and cross-border investment.

At the same time, the administration maintains that Iran bears direct responsibility for the actions of its regional allies and should therefore bear the financial consequences of attacks disrupting international commerce.

The White House has repeatedly described its campaign as part of a broader strategy aimed at restoring security to critical maritime routes while increasing economic pressure on Tehran. Alongside military operations, Washington has expanded sanctions targeting Iranian military procurement networks, oil revenues and entities accused of supporting the Islamic Revolutionary Guard Corps.

Diplomatic prospects remain uncertain.

Despite intermittent discussions about indirect negotiations, relations between Washington and Tehran continue to deteriorate as military operations intensify. Iran insists that any meaningful diplomatic progress would require sanctions relief and the release of frozen assets, while the United States appears increasingly willing to use those same assets as leverage in the conflict.

Analysts believe Trump’s latest proposal is intended to reinforce deterrence by signalling that Iran could face not only military consequences but also substantial financial costs if attacks on international shipping continue.

Whether the plan can be implemented legally remains unclear, but politically it underscores the administration’s determination to combine military action, sanctions and financial pressure in its strategy toward Iran.

As airstrikes continue, shipping companies navigate heightened security risks and governments monitor developments with growing concern, the Gulf crisis shows few signs of easing. With global trade routes under pressure and diplomatic relations increasingly strained, the proposal to redirect frozen Iranian assets is likely to become another contentious issue in an already volatile regional confrontation.

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