Strait of Hormuz

Brent crude plunged 13% to around $95 per barrel following Trump's Iran ceasefire announcement, marking the steepest oil drop since the 1991 Gulf War. The selloff reflects hopes Iran will reopen the Strait of Hormuz, which handles 25% of maritime oil trade, though analysts warn shipping companies need stronger assurances before resuming tanker operations. US gasoline remains elevated at $4.16 per gallon, up from $2.98 before the conflict, while Middle Eastern producers had cut 7 million barrels daily in March.

President Trump argued the US imports "almost no oil" through the Strait of Hormuz and urged NATO allies to reopen the waterway themselves, despite gasoline averaging over $4 per gallon nationwide. While EIA data shows the US imports about 7% of crude from the Gulf, analysts warn global market shocks still impact American consumers through interconnected pricing and supply chains, calling Trump's stance "hollow" leverage against reluctant allies.

Brent crude plunged to $92 from record highs above $144, marking the largest single-day drop since 1991's Gulf War, after President Trump agreed to a two-week ceasefire that reopens the Strait of Hormuz. The Pakistan-mediated deal suspends US strikes on Iranian infrastructure in exchange for coordinated safe passage through the vital shipping lane. Iran claims victory whilst agreeing to halt defensive operations, though missile launches continued post-announcement. The reprieve ends five weeks of supply disruption affecting 20% of global oil trade.

Iran established a de facto shipping corridor through territorial waters near Larak Island, with one tanker operator reportedly paying $2 million for IRGC transit approval. Nine ships have used the route requiring visual checks, whilst governments including India, China, and Malaysia negotiate directly with Tehran.

Asian stocks surged 0.7-8% with oil dropping below $100 as ceasefire hopes spread, but strategists warn the rally depends entirely on Hormuz reopening. Iran earns $139 million daily from oil exports during the crisis, creating financial incentives to prolong closure despite diplomatic pressure.

Brent crude's 60% surge to $104.63 since the Iran war began could persist even after fighting ends if the Strait of Hormuz remains unstable, according to Homin Lee at Lombard Odier. The strategist noted that 15 ships have passed through with Iran's permission, but sustained $100+ oil requires only the threat of closure, not active blockade. With 80% of Hormuz flows heading to Asia, energy-importing economies face prolonged stagflation risks that could outlast any military resolution.

Donald Trump extended his deadline for Iran to reopen the Strait of Hormuz until Tuesday 8pm ET, threatening strikes on power plants and bridges if Tehran refuses. Pakistani, Egyptian and Turkish mediators are pushing a 45-day ceasefire deal, but Iranian officials have rejected multiple US proposals and sources say chances of agreement within 48 hours are "slim". The stakes are enormous: a comprehensive US-Israeli bombing campaign targeting Iran's energy infrastructure is ready to execute if diplomacy fails.

Saudi Aramco raised its flagship Arab Light crude price for Asian buyers to a record $19.50 per barrel premium above regional benchmarks, responding to Iran's near-closure of the Strait of Hormuz. The hike was lower than the $40 premium traders expected, but Brent has still surged over 50% year-to-date with 180 million barrels disrupted so far according to Aramco's CEO. OPEC+ agreed to raise output by 206,000 barrels daily starting May, but repairs to damaged infrastructure will be costly and time-intensive.

Indian Potash Limited issued a tender for 2.5 million tonnes of urea as Middle East conflict disrupts supplies ahead of monsoon planting season. At least 21 vessels carrying 919,000 tonnes of urea are stranded beyond the Strait of Hormuz, while domestic plants have shut due to LNG shortages from Qatar. India imports heavily from Gulf nations for rice, corn and cotton farming, making this a potential food security crisis if the conflict drags on.