Trump's Strait of Hormuz rescue plan fails to budge oil markets

Oil markets yawned at President Trump’s announcement that the US will shepherd vessels stuck in the Strait of Hormuz, with Brent crude holding virtually flat on Monday morning as traders dismissed the initiative as inadequate to address the worst energy disruption in decades.

Brent futures for July hovered at $108.11 as of 05:00 GMT, down just 0.06 percent. Trump unveiled the operation Sunday, calling it “Project Freedom,” but offered scant operational details. The administration notably stopped short of confirming whether US Navy escorts would accompany the effort, a proposal previously rejected by officials citing preparation gaps.

The plan faces immediate headwinds. Senior Iranian officials have signalled non-cooperation, with Ebrahim Azizi, head of Iran’s parliamentary National Security Commission, warning Sunday that any “American interference” in the strait would violate the ceasefire established April 7. That fragile truce now looks even more precarious.

Incidents continued Monday. The UK military reported a tanker struck by “unknown projectiles” off the United Arab Emirates coast, while a bulk carrier near Iran claimed multiple attacks from small craft. The UK Maritime Trade Operations confirmed no crew injuries.

June Goh, senior oil analyst at Sparta in Singapore, suggested Trump’s operation targets rescuing stranded sailors rather than restoring legitimate shipping flow. Global observable oil inventories are collapsing rapidly, a factor likely weighing heavier than political posturing about reopening the waterway, she told Al Jazeera. “Normalising flow through the Strait of Hormuz will take more than what Project Freedom is offering, whilst the yawning gap in oil supply will take months to resolve.”

The numbers tell the story. Only 20 vessels crossed the strait Wednesday, compared to 129 daily transits before the US-Israeli campaign against Iran commenced in late February. That waterway normally carries one-fifth of the world’s oil supplies. Goldman Sachs estimates the closure and infrastructure attacks have slashed global daily production by 14.5 million barrels.

Brent has climbed nearly 50 percent since the war began, with analysts predicting prices remain elevated long after any peace deal, given the backlog of unloaded energy and Iranian mines requiring clearance. According to UN Trade and Development data, the strait historically averaged 129 daily crossings. Current traffic: a fraction of that.