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Risk Escalation in the Strait of Hormuz Sparks Oil to Turn Bullish Again
Focus on Crude Oil:
Any US intervention in the Strait of Hormuz will be considered a breach of the ceasefire, said a senior Iranian official.
Seven major OPEC+ members confirmed plans to increase production by 188,000 barrels per day in June.
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Monday, May 4, 2026 - At the start of this morning’s week, oil prices were seen moving higher after a bullish correction/pullback, driven by rising risks of escalation in the Strait of Hormuz following the Trump Freedom Project plan. On the other hand, confirmation of the OPEC+ production increase limits further price movement.
Ebrahim Azizi, head of the national security commission in Iran’s parliament, warned on Sunday that any US intervention in the Strait of Hormuz would be considered a breach of the ceasefire. The warning came after Trump announced that on Monday morning the US would begin the “Freedom Project” to free ships stranded in the Strait of Hormuz by deploying 15,000 US military personnel, more than 100 land- and sea-based aircraft, as well as warships and drones.
Still in the Middle East, a tanker was reportedly hit by an unknown projectile while transiting at about 78 nautical miles north of Fujairah city in the United Arab Emirates, the UK Maritime Trade Operations (UKMTO) said on Monday. The attack followed an assault on a bulk cargo ship by several small boats while passing north about 11 nautical miles west of Sirik, Iran, on Sunday, UKMTO added.
Meanwhile, in a virtual meeting held on Sunday, seven major OPEC+ member countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—confirmed they will increase production by 188,000 bph in June, from additional voluntary production adjustments in April and November 2023. The decision signals that the producer alliance will continue its production ramp-up despite the UAE’s exit, said an OPEC+ source.
Also weighing on prices, Iraqi Deputy Minister of Oil Basim Mohammed said on Saturday that he is optimistic that Iraq’s oil production and exports can return to normal levels within seven days after the end of the crisis in the Strait of Hormuz. Mohammed said Iraq’s current production stands at 1.5 million bph, with about 200,000 bph exported via Ceyhan, while two tankers have been readied and two more are expected to arrive depending on security conditions in the strait.
From a technical perspective, oil prices could meet the nearest resistance level at $104 per barrel. However, if negative catalysts emerge, prices could fall to the nearest support level at $99 per barrel.