Trump said the US will use frozen Iranian assets to pay for damage to ships and cargo as strikes on Iran continued.
Iran condemned the proposal, while fresh Houthi attacks and shipping threats pushed oil prices above $100 a barrel.
The escalation comes weeks after Trump declared a US-Iran ceasefire agreement "over" following renewed attacks in the Strait of Hormuz.
The United States will use frozen Iranian assets held by it to pay for damage to ships and cargo, President Donald Trump said, as US forces carried out strikes on Iran for a 13th consecutive night, with the latest attacks adding to tensions across the region.
According to a BBC report, Trump's announcement comes as the US continues military operations against Iran, while attacks by the Iran-backed Houthis in the Red Sea and growing concerns over shipping through the Strait of Hormuz have heightened fears over regional maritime security and global oil supplies. The developments also follow Trump's declaration that a ceasefire agreed between Washington and Tehran last month was "over".
The US military said it launched strikes on Iran for the 13th straight night. Iranian state media reported that four people were killed and five others injured.
The US president said damage to ships and cargo "will be paid for by Iranian Money that the United States has in its possession, and controls", adding that the amount could be "very substantial". He had earlier described the move as "fair and equitable".
Iranian Foreign Minister Abbas Araghchi rejected the proposal, calling it an "incendiary precedent". Responding to Trump's remarks, he wrote: "Those who celebrate or profit from such funds should remember: once governments normalize confiscation, no one's assets are safe."
"Ensuing chaos will not be pretty or peaceful," Araghchi added.
According to BBC, the latest strikes followed Yemen's Iran-backed Houthis' claim to have attacked two Saudi tankers in the Red Sea. The attacks, coupled with growing concerns over threats to global shipping, helped push crude oil prices above $100 (£52.31) a barrel, their highest level since May.
Trump had earlier warned of "major military punishment" against Iran over attacks by the Houthis and Iran.
The US military said the strikes were intended to degrade Iran's ability to threaten civilian shipping in regional waters. US Central Command (Centcom) said it had targeted "Iranian military command centers, drone storage facilities, communication networks, coastal surveillance sites and maritime capabilities".
But as the US pushes to regain control over the Strait of Hormuz, Reuters news agency reported, citing ship-tracking data, that only one tanker transited the waterway on Thursday, 24 July, the lowest level since 7 May.
BBC reported that the US and Iran agreed to a 14-point Memorandum of Understanding (MoU) in June to halt military operations, reopen the Strait of Hormuz and reach an agreement to end the war within 60 days.
However, three weeks after it was signed, Trump declared the ceasefire "over" following Iranian attacks on ships in the Strait of Hormuz and subsequent US strikes in response.
Point 11 of the MoU states that the "United States of America undertakes to make fully available for use the frozen or restricted funds and assets of the Islamic Republic of Iran".
