Oil prices rise as Hormuz closure persists and U.S. launches ‘Project Freedom’

Oil prices gain on supply risk

July futures for international benchmark Brent crude were up 2.27% at $110.63 per barrel as of 4:24 a.m. ET on Monday. U.S. West Texas Intermediate (WTI) futures for June rose 1.98% to $103.96 per barrel.

The price gains reflect continued concern over disruptions to flows through the Strait of Hormuz, which before the war had handled about a fifth of global energy supplies. With the strait facing a blockade, traffic has come to a near standstill, amplifying supply risk in the oil market.

‘Project Freedom’ aims to assist stranded vessels

President Trump said in a Truth Social post on Sunday that the United States would attempt to “free” cargo ships stranded by the closure of the Strait of Hormuz since the start of the Iran war. The operation, called “Project Freedom,” will focus primarily on assisting civilian ships flagged in countries not affiliated with the conflict to exit the waterway.

U.S. Central Command stated that military support for Project Freedom will include guided-missile destroyers, more than 100 land- and sea-based aircraft, multi-domain unmanned platforms, and 15,000 service members. The announcement follows confirmation from the United Kingdom Maritime Trade Operations agency that a tanker was hit by projectiles north of Fujairah in the United Arab Emirates, highlighting the risks for vessels operating in the region.

OPEC+ output move and recession risk concerns

Beyond the security situation, traders are evaluating OPEC+’s decision to increase oil output by 188,000 barrels per day. The agreement was reached at the group’s first meeting since the departure of the United Arab Emirates from the alliance.

Gaurav Ganguly, head of international economics at Moody’s Analytics, cautioned that the global economy is vulnerable to higher energy prices. He said the firm estimates that Brent crude sustained around $125 per barrel would be sufficient to push the global economy into “some sort of recession.”

FAQ

Why did oil prices rise on Monday?
Oil prices rose as traders reacted to the closure of the Strait of Hormuz, the U.S. announcement of Project Freedom to assist stranded ships, and ongoing tensions in the Middle East, all of which increased perceived supply risks.

What is Project Freedom?
Project Freedom is a U.S. initiative announced by President Donald Trump to “free” cargo ships trapped by the closure of the Strait of Hormuz, focusing mainly on civilian vessels flagged in countries not involved in the conflict.

How is the U.S. military supporting Project Freedom?
According to U.S. Central Command, support will include guided-missile destroyers, more than 100 land- and sea-based aircraft, multi-domain unmanned platforms, and 15,000 service members.

What did Moody’s Analytics say about oil prices and recession risk?
Gaurav Ganguly of Moody’s Analytics stated that Brent crude sustained at around $125 per barrel would likely push the global economy into some form of recession.