Oil prices opened slightly lower on Monday as European markets prepared to trade, following US President Donald Trump's announcement that Washington would begin helping vessels leave the Strait of Hormuz. The plan, dubbed 'Project Freedom,' was immediately rejected by Tehran, leaving the strategic waterway—through which roughly a fifth of global oil passes—still effectively closed.
At the time of writing, US benchmark West Texas Intermediate crude was down 0.28% to $101.65 per barrel, while Brent crude, the international benchmark, edged 0.06% lower to $108.10 per barrel. Before the conflict with Iran erupted, Brent was trading at just over $70 per barrel.
Strait of Hormuz Remains Bottleneck
The standoff has stranded hundreds of tankers, bulk carriers, and cargo ships across the Gulf. Stephen Innes of SPI Asset Management noted in a commentary that the oil market 'remains the fulcrum, with hundreds of tankers, bulk carriers, and cargo ships still stranded across the Gulf, idling as storage constraints force producers to shut ... production simply because there is nowhere left to store it.'
Trump said 'Project Freedom' would begin Monday morning in the Middle East. The US Central Command said the operation would involve guided-missile destroyers, more than 100 aircraft, and 15,000 service members, but the Pentagon did not immediately clarify how these assets would be deployed. Iran's rejection of the plan suggests the impasse may continue, keeping oil prices volatile and threatening global supply chains.
For European economies, which rely heavily on energy imports, the prolonged closure of the Strait of Hormuz has already pushed fuel costs higher and added to inflationary pressures. The situation has also deepened transatlantic tensions, as European leaders have urged restraint and diplomatic solutions, while Washington has pursued unilateral military action. The rejection of Iran's latest peace proposal further complicates the outlook.
Asian and US Markets React
In Asia-Pacific trading overnight, Hong Kong's Hang Seng index rose 1.4% to 26,135.47, while markets in mainland China and Japan were closed for holidays. South Korea's Kospi surged 3.8% on strong buying of tech stocks, and Taiwan's Taiex jumped 4.2%.
On Friday, the S&P 500 climbed 0.3% to another all-time high of 7,230.12, closing out a fifth straight winning week. The Dow Jones Industrial Average dipped 0.3% to 49,499.27, while the Nasdaq composite added 0.9% to a record close of 25,114.44. Apple led the rally, rising 3.3% after reporting better-than-expected profit.
US corporate earnings have generally exceeded expectations in the first quarter of 2026, with 84% of S&P 500 companies that have reported so far topping analysts' estimates, according to FactSet. The index is on track for roughly 15% year-on-year profit growth. However, the war with Iran and high oil prices have soured consumer confidence among many US households.
Oil price volatility remains the main uncertainty for the global economy. Last week, prices rose on fears that the Strait of Hormuz could remain closed for an extended period. The two largest US oil companies, Exxon Mobil and Chevron, reported stronger quarterly profits than expected, but their stock prices fell 1% and 1.4% respectively on Friday as oil prices retreated and net income dropped year-on-year.
In currency markets early Monday, the dollar strengthened to 157.18 Japanese yen from 156.80 yen, while the euro slipped to $1.1724 from $1.1746. The euro's weakness reflects ongoing concerns about European energy costs and the broader economic impact of the Middle East crisis.
European policymakers are closely monitoring the situation, as any sustained disruption to oil flows through the Strait of Hormuz could exacerbate the continent's energy challenges and complicate the European Central Bank's efforts to manage inflation. The clash between German Chancellor Friedrich Merz and Trump over US troop withdrawals has further strained transatlantic relations, making coordinated action on the oil crisis more difficult.
