Trump Claims Iran Deal to Reopen Strait of Hormuz Largely Negotiated
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
strait-of-hormuziran-deal
Fazen Markets Editorial Desk
Collective editorial team · methodology
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President Donald Trump stated that an agreement with Iran to reopen the Strait of Hormuz is "largely negotiated," according to a report published on May 23, 2026. The announcement, made during discussions with Gulf leaders and allies, proposes a resolution to the military conflict that has blocked the critical maritime chokepoint. The blockade had previously forced a rerouting of over 20 million barrels of daily oil shipments, equivalent to approximately 21% of global petroleum consumption. Global benchmark Brent crude futures fell 4.2% to $78.50 per barrel on the news after trading above $82.00 earlier in the week.
The Strait of Hormuz is the world's most significant oil transit corridor, linking producers like Saudi Arabia, the UAE, and Iraq with global markets. A closure represents a direct threat to global energy security. The current conflict follows a historical pattern of regional tensions impacting the waterway, including Iranian seizures of tankers in 2023 and the significant disruption during the 2019 attacks on Saudi oil facilities that briefly wiped 5.7 million barrels per day from the market. The current macro backdrop features elevated volatility in energy markets, with the ICE Brent Crude Volatility Index averaging 38% over the prior month compared to a 2025 average of 25%. The catalyst for the potential deal appears to be mounting economic pressure on all parties from the prolonged shutdown, including strain on Gulf state budgets and Iran's need for sanctions relief.
The immediate market reaction saw Brent crude futures drop $3.45 to settle at $78.50 per barrel. The United States Oil Fund (USO) declined 3.8% in after-hours trading. Prior to the announcement, insurance premiums for vessels transiting the Persian Gulf region had skyrocketed to over 1.5% of a ship's hull value, a tenfold increase from pre-crisis levels of around 0.15%. The table below shows the price change for key energy assets following the news.
| Asset | Pre-News Price (May 23) | Post-News Move |
|---|---|---|
| Brent Crude | $82.00 | -4.2% to $78.50 |
| WTI Crude | $79.10 | -3.9% to $76.00 |
| Energy Select Sector SPDR Fund (XLE) | $98.50 | -2.5% (after-hours) |
The broader S&P 500 Index futures gained 0.6% on the potential de-escalation, outperforming the energy sector.
A reopening of the Strait of Hormuz would be a clear negative for crude oil prices due to the restoration of supply logistics. Integrated oil majors with significant downstream operations, such as ExxonMobil (XOM) and Chevron (CVX), could see margin pressure from lower upstream realizations, though their refining segments may benefit from cheaper feedstock. Pure-play exploration and production companies like Occidental Petroleum (OXY) are more exposed to the downside. Conversely, shipping firms like Frontline (FRO) and Euronav (EURN) would benefit from normalized insurance costs and the resumption of direct routes, reducing voyage times and boosting vessel utilization. A key risk to this bearish oil thesis is the lack of confirmed details; any perceived weakness in the deal's enforcement mechanisms could cause the risk premium to quickly re-enter the market. Trading flow data indicates increased selling pressure on oil futures and a rotation into travel and leisure ETFs.
Market participants will scrutinize the upcoming OPEC+ meeting scheduled for June 5, 2026, where producers may discuss output policy adjustments in response to a potential supply surge. The next official US inventory report from the Energy Information Administration on May 28 will provide a baseline for supply disruptions. Technical analysts are watching the $75.00 level for Brent crude, which represents a key support zone from early 2025. A confirmed break below this level could signal a further decline toward $70.00 if the deal is finalized and implemented without incident. Any official confirmation or detailed announcement from the White House will be the primary catalyst for the next major price move.
A sustained drop in global crude oil prices typically translates to lower prices at the pump for consumers. The US national average for gasoline, which had increased by over 15% since the blockade began, could see a reversal of those gains. The full pass-through to retail prices usually occurs within two to four weeks, depending on regional refinery margins and distribution logistics. Lower energy costs also act as a deflationary force across the economy.
The most recent major closure was the blockage of the Suez Canal by the container ship Ever Given in March 2021, which disrupted an estimated $9.6 billion in trade per day. The Strait of Hormuz has never been fully closed, but periods of extreme tension, such as the 1980-1988 Iran-Iraq "Tanker War," saw attacks on vessels and significant insurance hikes. The economic impact of a Hormuz closure is far greater due to its centrality to energy markets.
Beyond major oil exporters Saudi Arabia and Iraq, regional economies like the United Arab Emirates and Qatar rely heavily on the strait for both oil and liquefied natural gas (LNG) exports. Major importers in Asia, including China, India, Japan, and South Korea, which source a majority of their crude from the Persian Gulf, face immediate energy security and economic challenges from any prolonged disruption.
A potential deal to reopen the Strait of Hormuz introduces significant downside risk to oil prices by alleviating a major supply constraint.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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