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Escalation Risk of Strait of Hormuz Tension Triggers Return to Bullish Oil
Focus on Crude Oil:
Any U.S. intervention in the Strait of Hormuz will be considered a breach of the ceasefire, an Iranian senior official said.
Seven major OPEC+ members confirmed plans to increase production in June by 188,000 barrels per day.
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Monday, May 04, 2026 — At the opening of this morning’s session, oil prices were seen moving in a bullish correction, driven by rising escalation risks in the Strait of Hormuz following Trump’s 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 of Iran’s parliament, warned on Sunday that any U.S. intervention in the Strait of Hormuz would be considered a breach of the ceasefire. The warning was issued after Trump announced that on Monday morning the U.S. would begin a “Freedom Project” to free ships stranded in the Strait of Hormuz, by deploying 15,000 U.S. military personnel, more than 100 land- and sea-based aircraft, as well as warships and drones.
Still in the Middle East, a tanker was reported to have been hit by an unknown projectile while passing about 78 nautical miles north of Fujairah city in the United Arab Emirates, the United Kingdom Maritime Trade Operations (UKMTO) said on Monday. The attack followed an assault on a bulk cargo vessel by several small boats while it was passing north about 11 nautical miles west of Sirik, Iran, on Sunday, UKMTO added.
Meanwhile, during a virtual meeting held on Sunday, the seven main OPEC+ member countries—Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman—confirmed they will increase production by 188,000 bpd in June, from additional voluntary production adjustments made in April and November 2023. The decision suggests the producer alliance will continue to increase production even though the UAE has exited, said an OPEC+ source.
Adding to price pressure, 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 crisis in the Strait of Hormuz ends. Mohammed said Iraq’s current production is 1.5 million bph, with about 200,000 bph exported through 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 may face the nearest resistance at the $104 per barrel level. However, if negative catalysts are encountered, prices could fall to the nearest support at the $99 per barrel level.