Oil Nears $107 Amid Doubts About Trump's Plan in Hormuz

SadaNews - Oil prices stabilized as traders doubted the effectiveness of U.S. President Donald Trump's plan for the United States to direct neutral ships through the Hormuz Strait, while reports indicated that a tanker had come under attack in the waterway.

There was little change in the price of Brent crude remaining above $107 per barrel, after a decline of up to 2.4% at the opening, while West Texas Intermediate crude was near $102.

According to Trump, the U.S. step, starting Monday, was supposed to allow ships stranded due to the war with Iran to pass through the strait.

Tanker Incident and Security Uncertainty

"British Maritime Trade Operations" reported that a tanker was hit by projectiles 78 nautical miles north of Fujairah in the UAE. The identity of the ship was not specified, but it was reported that the crew was safe.

Trump said in a post on social media, "We will use our best efforts to safely get their ships and crews out of the strait." He added, "In all cases, they said they would not return until the area is safe for navigation and others."

For its part, the U.S. Central Command announced on Sunday that it would provide military support, including destroyers equipped with guided missiles, aircraft, and drones, although the "Wall Street Journal" reported that the plan currently does not include direct naval escort.

Harris Khursheed, chief investment officer at "Karobar Capital," stated, "Trump's fatigue is becoming more apparent; I don’t think the market takes it seriously." He added, "We saw an initial decline, but its lack of continuation indicates that investors do not regard it as a factor that actually changes the equation."

Prices Driven by Dual Blockade

Crude prices have seen a sharp rise this year, reaching their highest levels since 2022 last week, with market disruptions due to the conflict threatening to slow economic growth and increase inflation.

This rise has been supported by a dual blockade of the vital strait, with Tehran preventing ships from leaving the Gulf waters, while the United States intercepts ships headed to or from Iranian ports.

In his comments, Trump hinted at the possibility of a military response if Iran attempted to block ships. He also mentioned there were "very positive discussions" with Tehran that could lead to a "very positive" outcome, without providing further details.

The U.S. measures aim to choke the Iranian economy by forcing the country to close some oil wells, where Treasury Secretary Scott Hastings noted over the weekend that the closure could begin "within the next week" as storage facilities fill up.

OPEC+ Increases Production

The war erupted in late February following a U.S. and Israeli attack on Iran. Washington framed it as an attempt to prevent Tehran from posing a threat due to its nuclear program.

In early March, the U.S. president stated that the United States would provide naval escort to ensure safe passage for oil tankers.

Over the weekend, "OPEC+" agreed, in its first meeting after the UAE withdrew, to increase production quotas for June, in an attempt to send a message that operations are continuing normally. In a related context, Abu Dhabi revealed its growth plans.

In the latest dealings, the price of Brent crude contracts for July delivery rose 0.3% to $108.46 per barrel by 12:00 PM Singapore time, while West Texas Intermediate crude contracts for June delivery fell 0.1% to $101.89 per barrel.