Trump Pauses Strait of Hormuz Escort Plan as Oil Markets Brace for Extended Crisis

President Donald Trump said the United States will temporarily pause its operation to guide ships through the Strait of Hormuz while maintaining the blockade , after oil futures climbed higher above $100 a barrel and the US and Iranian militaries traded shots on Monday . MarketWatch reported that crude-oil futures fell late Tuesday after President Donald Trump said his latest effort to partially reopen the Strait of Hormuz would be paused, to buy more time to reach an agreement to end hostilities with Iran .

According to market data, WTI Crude traded at $71.50 per barrel on Tuesday, up 0.6%, while Brent Crude stood at $75.20 per barrel, up 0.5%. The pause comes as 20% of the world's oil passes through the strait , which Iranian forces have declared "closed" since March 4, 2026, threatening and carrying out attacks on ships attempting to transit .

Oil Futures Still Underpricing the Supply Shock

OilPrice.com reported that Brent and WTI crude futures this week are trading more than $30 per barrel higher compared to the levels on February 27, the day before the U.S. and Israel bombed Iran and prompted the Islamic Republic to close the Strait of Hormuz . Yet the futures trade $20-$30 per barrel lower than the peaks seen in March when the crisis first erupted .

Al Jazeera reported that Brent crude, the international benchmark, was essentially flat on Monday morning, as traders saw little hope of Trump's plans resolving what the International Energy Agency has called the biggest energy disruption in history . June Goh, a senior oil market analyst at Sparta in Singapore, told Al Jazeera that "global observable oil inventories are starting to fall sharply, which should weigh on market sentiment more than political statements for a reopening of the strait" .

The Financial Times reported that global oil reserves are plunging at a record pace as the Middle East war strains supplies, with stocks near an 8-year low ahead of the summer travel season.

UAE Exits OPEC as Hormuz Crisis Drags On

The United Arab Emirates announced its decision to withdraw from the Organisation of the Petroleum Exporting Countries (OPEC and OPEC+), effective May 1, 2026 . Al Jazeera reported that the move deals a heavy blow to the oil-exporting groups at a time when the US-Israel war on Iran has caused a historic energy shock and rattled the global economy .

The UAE will be the largest oil producer to leave OPEC, as it was producing about 3.4 million barrels per day, representing roughly 3% of global crude supply, prior to the US-Israeli war on Iran . The country plans to expand production capacity from about 3.4 million barrels per day to 5 million barrels per day by 2027, supported by upstream investment .

Al Jazeera reported that should traffic return to pre-war levels, the UAE could potentially flood the market with its 1.6 million barrels per day of extra production – equivalent to about 1.5 percent of global oil supply . Kingsmill Bond, an energy strategist at think tank Ember Future, said "they are clearly preparing for the period after the war, because now that we have reached peak oil demand and we are entering a new environment – they want to be free from the constraints of OPEC" .

U.S. Crude Exports Hit Record Levels

CNBC reported that U.S. oil exports have jumped to 5.2 million barrels per day in April, a more than 30% increase over the 3.9 million barrels per day exported in February before the war, according to data from Kpler . March was the busiest month in the history of the Port of Corpus Christi, and oil exports have increased to about 2.5 million barrels per day since the war started compared to 2.2 million barrels per day last year .

Matt Smith, director of commodity research at Kpler, said many of those tankers are coming from Asian countries that imported their oil from the Middle East before the war, and they are now turning to the U.S. Gulf Coast because the trade route into the Persian Gulf through the strait is effectively closed .

OilPrice.com noted that the United States is exporting crude at record levels as the world grapples with an unprecedented disruption of Middle Eastern supply, stating that U.S. oil has become the supply of last resort—and it is not infinite.

Saudi Arabia Cuts Prices After Record Premiums

Bloomberg reported that state oil producer Saudi Aramco lowered its flagship Arab Light crude by $4 a barrel to a premium of $15.50 over regional benchmarks in June, according to a price list seen by Bloomberg . This follows a record-high premium of $19.50 above the average Oman/Dubai benchmark for May .

Bloomberg reported that Saudi Arabia is gaining a revenue edge over most of its Gulf Arab neighbors as it is able to divert the bulk of crude exports to the Red Sea, with higher prices more than compensating for lost shipments through the strait, according to Goldman Sachs Group Inc . Since the war began in late February, Riyadh has rerouted around 4 million barrels of oil a day to its East-West pipeline, while the UAE ramped up oil shipments through its own pipeline but loaded about 2 million barrels each day in March, still only half what it was exporting in February .

Natural Gas Markets Also Under Pressure

Natural Gas Intel reported that physical natural gas prices jumped on Tuesday for Wednesday delivery as market participants focused on near-term demand strength, even as the prompt month futures contract stumbled. According to market data, Henry Hub Natural Gas traded at $3.25 per MMBtu, down 2.4%.

The IEA reported that the Ras Laffan facility in Qatar, which is the largest liquefaction facility in the world, has been offline since it was first attacked on March 2, and natural gas prices in Asian markets have risen sharply since the start of the war to attract more LNG cargoes .

The energy crisis shows no signs of quick resolution. CNN reported that energy experts are warning that the US is likely only weeks away from averaging $5 per gallon for gasoline nationwide , while Gregory Brew, a senior analyst on Iran and the energy sector at political risk firm Eurasia Group, said "the longer this goes on, the higher prices are going to get. There's nothing that can replace Hormuz output" .