Brent oil drops to $108 as Trump announces Hormuz security operation

Oil prices declined on Monday, May 4, following remarks by US President Donald Trump announcing the start of an operation to ensure the safe passage of vessels through the Strait of Hormuz, according to Reuters.

Despite the decline, Brent crude remains supported above the $100-per-barrel level due to ongoing geopolitical tensions between the United States and Iran.

Brent futures fell by 0.1% to $108.11 per barrel after dropping more than $2 on May 1. US West Texas Intermediate (WTI) crude also eased to $101.50 per barrel.

Analysts note that the market continues to be under pressure from supply disruptions and uncertainty surrounding the regional situation. They expect prices to remain elevated until a stable solution is reached regarding maritime security in the Strait of Hormuz.

Negotiations between the United States and Iran are ongoing, but no agreement has yet been reached. Iran is insisting on the lifting of shipping restrictions, while Washington is prioritising a nuclear deal.

Additional pressure on the market came from OPEC+’s decision to increase oil production by 188,000 barrels per day in June. However, actual supply growth remains limited due to the ongoing regional crisis.

By Jeyhun Aghazada