Trumps plan for Strait of Hormuz fails to calm oil market

US President Donald Trump Announces Operation to Guide Vessels Through Strait of Hormuz

A statement from US President Donald Trump on Sunday announced that the US will “guide” vessels stranded in the Gulf through the Strait of Hormuz, dubbed “Project Freedom”. The operation aims to resolve the energy disruption caused by the closure of the waterway.

As of 05:00 GMT, Brent crude futures for July stood at $108.11, down 0.06 percent. The price movement was largely unchanged despite Trump’s announcement.

US Central Command stated that it would “support” vessels seeking to transit the waterway, without specifying whether naval escorts would be involved. Senior Iranian officials have expressed skepticism about cooperation with the plan, citing concerns over potential breaches of their truce.

Reports of tanker attacks and incidents involving small craft off the coast of Iran and the United Arab Emirates were also confirmed by UK Maritime Trade Operations (UKMTO). The crews involved in these incidents were not harmed.

Energy market analysts noted that global observable oil inventories are falling sharply, which may weigh on market sentiment more than political statements. Goldman Sachs estimates that the closure of the Strait of Hormuz and attacks on energy infrastructure have reduced global daily production by 14.5 million barrels.

The International Energy Agency has described the current situation as the biggest energy disruption in history. The US and Iran have been engaged in a fragile ceasefire since April 7, with senior Iranian officials warning that any “American interference” would be considered a breach of their truce.

Only 20 vessels crossed the Strait of Hormuz on Wednesday, according to ship tracking data monitored by maritime intelligence platform Windward. The average daily transits through the strait before the US and Israel launched their war on Iran in late February were around 129, according to the United Nations Trade and Development (UNCTAD) agency.

The market reaction to Trump’s announcement has been muted, with analysts suggesting that prices may remain elevated for some time after any peace deal is reached between Washington and Tehran.

Source: Al Jazeera