Oil prices held above $108 a barrel on Monday as markets weighed mounting security risks in the Strait of Hormuz against U.S. efforts to ease shipping disruptions, with investors closely watching whether Washington’s newly launched “Project Freedom” can prevent a deeper supply shock.
Brent crude traded near $108.36 per barrel, largely flat on the day after earlier volatility, as traders balanced geopolitical tensions with cautious optimism over tentative diplomatic signals.
The market remained on edge after reports that a commercial vessel was struck near the Strait shortly after U.S. President Donald Trump announced plans to help guide stranded ships through the contested waterway beginning Monday. Iran warned that any unauthorized U.S. military presence in the narrow shipping corridor would provoke a severe response, while insisting vessels coordinate with its forces, reinforcing fears that one of the world’s most critical energy chokepoints remains dangerously unstable.
Trump’s initiative, branded “Project Freedom,” is designed to assist trapped commercial vessels, particularly those from non-aligned nations, out of the Strait, where hundreds of ships remain stranded after months of conflict and blockade conditions. While the announcement initially offered some market reassurance, analysts say oil remains elevated because traders are unconvinced the operation alone can restore normal traffic without broader de-escalation between Washington and Tehran.
The Strait of Hormuz, which normally handles roughly a fifth of global oil flows, has become the central pressure point in global energy markets this year. Continued disruptions there have kept crude above $100 despite OPEC+ announcing another modest production increase for June, as additional barrels may do little to offset logistical paralysis if shipping routes remain constrained.
Diplomatic uncertainty also remains a major market variable. Tehran said it is reviewing Washington’s response to its latest 14-point proposal, preserving a narrow possibility for negotiations even as military threats intensify. Until a clearer political breakthrough emerges, analysts expect oil to remain structurally supported by risk premiums tied to supply insecurity, inflation fears, and the broader global economic fallout from prolonged Gulf instability.
