Oil prices slip as US plans to guide ships out of the Strait of Hormuz
USOIL analysis
President Trump announced "Project Freedom", a "humanitarian gesture" to guide ships out of the Strait of Hormuz starting on Monday [1]. He also noted "very positive discussions" between US and Iranian representatives, but warned that any interference with the project will have to be dealt with "forcefully". These developments create some hope for a normalisation of energy flows through this crucial waterway, just as diplomatic efforts for a resolution to the conflict continue.
Meanwhile, OPEC+ announced a decision to increase production by 188,000 barrels per day in June [2], its first decision without the United Arab Emirates, which announced its departure last week and is likely to seek freedom in ramping up output. In an early sign of such intention, Abu Dhabi National Oil Company (ADNOC) is accelerating its strategy for growth in upstream and downstream operations to meet rising global demand [3]. These plans to support production come as risks to oil consumption are mounting, with the prolonged rise in prices creating headwinds for the global economy. The International Energy Agency (IEA) now expects consumption to contract this year, noting that "demand destruction" will spread "as scarcity and higher prices persist". [4]
These developments are putting pressure on USOil, which remains at risk of a move below the EMA200. Such price action, alongside the RSI breaking below 50, could open the door to deeper declines toward and beyond 80.54. However, USOil maintains its bullish bias above the EMA200 with the ability to push for new 2026 highs.
Uncertainty around a resolution to the conflict persists. President Trump said he will be reviewing Tehran's latest proposal but "can't imagine that it would be acceptable" [5]. Moreover, it remains to be seen how effective Project Freedom can actually be, given that the Strait of Hormuz remains under a dual blockade. For transit to be restored, security needs to be re-established and that looks difficult at this point. The UK Maritime Trade Operations (UKMTO) has reported fresh attacks on a tanker in the region [6]. Meanwhile, the OPEC+ output increase is largely symbolic as long as the Strait remains effectively shut, and UAE's intentions to bolster output are unlikely to have any near-term impact.
The situation on the ground remains unchanged and disruptions continue, tightening the market and reversing previously unfavourable fundamentals. Even if the Strait were to completely reopen, restoring capacity and flows could be a lengthy and costly process. TotalEnergies CEO Patrick Pouyanné said during last week's Q1 earnings call that the surplus markets were anticipating for 2026 "is now over" [7]. Exxon Mobil CEO Darren Woods said on Friday that the market "hasn't seen the full impact of that yet", expecting flows to take one to two months to normalise after the Strait reopens. [8]
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 04 May 2026 https://truthsocial.com/@realDonaldTrump/posts/116512555123589170 | |
| Retrieved 04 May 2026 https://www.opec.org/pr-detail/1779602-3-may-2026.html | |
| Retrieved 04 May 2026 https://www.wam.ae/en/article/c00z0by-adnoc-accelerate-growth-delivery-its-strategy-with | |
| Retrieved 04 May 2026 https://www.iea.org/reports/oil-market-report-april-2026 | |
| Retrieved 04 May 2026 https://truthsocial.com/@realDonaldTrump/posts/116507414650995614 | |
| Retrieved 04 May 2026 https://x.com/UK_MTO/status/2051091640568234365 | |
| Retrieved 04 May 2026 https://totalenergies.com/investors/results | |
| Retrieved 04 May 2026 https://investor.exxonmobil.com/earnings/financial-results |
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