Tehran slams Trump’s threat to use frozen Iranian assets as ‘incendiary’

Escalating tensions between the United States and Iran have reached a new flashpoint over the question of frozen Iranian assets. President Trump stated his intention to draw on Iranian funds held by the US government to pay for any damages incurred by vessels and cargo transiting the Strait of Hormuz. According to Trump's statement on his Truth Social platform, such compensation would be justified as "fair and equitable," even if the damages prove substantial.

Iran's Foreign Minister Abbas Araghchi swiftly rejected this approach, characterizing it as an inflammatory precedent that normalizes the confiscation of sovereign assets. He warned that permitting governments to seize funds to settle unrelated future claims would undermine financial security globally and create instability. The dispute over Iran's frozen assets had previously been part of negotiations under a memorandum of understanding signed in June between the two nations, though that agreement has since collapsed.

The broader context involves a sharp deterioration in US-Iran relations since early July, marked by reciprocal military operations. Trump indicated consideration of a "massive attack" on Iran, while the Iranian military announced fresh drone strikes against US installations in Bahrain and Jordan. Separately, Trump pledged "major military punishment" for Iran and Houthi forces following attacks on Saudi oil tankers in the Red Sea.

The financial stakes are substantial. While precise figures remain uncertain, estimates suggest Iran holds approximately $100 billion in frozen assets internationally. The US first froze Iranian funds in 1979 following the hostage crisis at its embassy in Tehran. The escalating military posture has also affected maritime commerce, with tanker traffic through the Strait of Hormuz dropping to a single vessel on Thursday—the lowest level since May 7, according to ship tracking data reviewed by Reuters.