US President Donald Trump has canceled plans to impose a 20% charge on all cargo passing through the Strait of Hormuz after receiving pressure from several Gulf states.
Instead, he said the United States would accept new investment and trade deals from countries in the region.
Despite the cancellation of the proposed charges, the United States is continuing to take tougher action against Iran.
Washington announced new sanctions on Iranian shipping activities, while the US military also launched a seven-hour strike on several targets near the Strait of Hormuz to weaken Tehran's ability to threaten trade routes.
Reports also said Trump is considering expanding military operations against Iran. He warned that attacks could be extended to critical infrastructure if Iran refuses to return to the negotiating table.
The cancellation of the charges is seen as a significant change in US policy on the Strait of Hormuz.
Among investors, Trump's actions have revived the term "TACO" (Trump Always Chickens Out), which refers to his tendency to backtrack on policy proposals under pressure.
Despite the cancellation of the transit charges, tensions in the Middle East have not subsided. Brent crude oil prices continued to rise to around US$86 a barrel after surging more than 11% in two trading sessions, driven by concerns about disruptions to global oil supplies due to the US-Iran conflict.
