Monday 04 May 2026 11:34 am
Trump turmoil sends oil prices back toward multi-year peak
The main international oil price surged back toward multi-year highs on Monday, as US President Donald Trump's pledge to get tanker traffic moving through the Strait of Hormuz was met with a chilling warning from Iran.
Brent crude was up over 5 per cent in morning London trade at $114 a barrel. The rise left it heading for the four-year peak over $126 which it claimed last week, when flare-ups in tension between the United States and Tehran coincided with the expiry of contracts scheduled for delivery in June.
Operation Freedom and Iran's Response
Washington's move to get oil flows up and running through the strait – dubbed Operation Freedom by Trump – intends to escort stranded vessels through the narrow channel which serves as the only navigable maritime route from the Persian Gulf to the open sea. Only between 21 and 30 miles wide, it is under the de-facto control of Iran. Before the three-month long war began, the strait carried around a fifth of tanker-bound global oil exports.
Tehran's response to the US plans was stark. It warned what it called “foreign armed forces, particularly the US aggressor army” that they will be “attacked” if they attempted “to approach or enter” the strait. When Trump announced Operation Freedom on social media on Sunday night, he said that any moves against it would be “dealt with forcefully”. Fears that the seafaring chokepoint could become a flashpoint rippled through global markets.
Market Reactions and OPEC Pledge
Brent crude turned around from earlier declines seen in the immediate aftermath of Trump's pledge to reopen the strait. A weekend pledge from OPEC to boost output did little to lift the mood. The Organisation of Petroleum Exporting Countries said June supply would rise by 188,000 barrels a day. But amid strain between its members and the departure of the United Arab Emirates from the group, City analysts doubt the rise will be realised.
Warren Patterson, head of commodities strategy at ING, said OPEC's pledge “won't happen amid ongoing disruptions in the Strait of Hormuz”. Of Operation Freedom, he warned: “The market does not seem convinced,” adding: “Reports indicate that, for now, the plan won't involve the US Navy escorting vessels. Even if this allows vessels to leave the Persian Gulf, we're likely to see little inbound traffic. This would only amount to temporary relief, as floating storage leaves the Persian Gulf.”
Supply Crunch and Holiday Fears
The fresh turmoil in the energy market came against a bleak backdrop of a looming supply crunch if the war does not end soon, and with it the tense stand-off over the Strait of Hormuz. David Morrison, senior market analyst at Trade Nation, said: “Oil traders must now sit back and wait for further updates from the US to get an idea if the current ceasefire is about to be broken, or if the stage can be set for another round of formal peace negotiations.”
Fears that a lack of jet fuel could disrupt the looming peak-summer holiday season remained a major talking point in the market, with Europe heavily dependent on supplies from the Gulf. ING's Patterson said: “Jet fuel inventories in Europe continue to tighten amid disruptions to refined product flows from the Middle East. Since 26 February, jet fuel stocks have fallen by 34 per cent, reaching their lowest level since 2020.”
