Trump Brokers Ceasefire as Hormuz Blockade Strains Oil Markets
Donald Trump brokered a ceasefire between Israel and Iran after a three-month naval blockade of the Strait of Hormuz drove global oil inventories to record lows.
A three-month military conflict involving the United States, Israel, and Iran led to a near-total blockade of the Strait of Hormuz, removing over 10 million barrels of daily supply. Despite forecasts that prices would hit $200 per barrel, Brent crude remained largely below $100 due to record U.S. exports, a 40% drop in Chinese imports, and a coordinated release of 400 million barrels by the International Energy Agency.
Donald Trump authorized strikes on Iran in February and later brokered a 60-day ceasefire following direct missile exchanges between Israel and Iran. To stabilize markets, the U.S. released 172 million barrels from its Strategic Petroleum Reserve and issued waivers for sanctioned Russian oil to boost flows to India. Other mitigating factors included Saudi Arabia and the UAE rerouting oil via pipelines and the emergence of clandestine ghost fleets disabling transponders to bypass the blockade.
Despite the ceasefire, analysts warn of extreme vulnerability. Global inventories are drawing down at a record pace, with U.S. reserves hitting 20-year lows and the Cushing, Oklahoma hub approaching operational minimums. Experts from JPMorgan and Piper Sandler predict prices could surge to between $120 and $150 per barrel in July and August unless the strait fully reopens and a durable peace settlement is reached.
