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The escalation of the Strait of Hormuz tension risk triggers 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 confirm plans to increase production by 188,000 barrels per day in June.
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Monday, May 4, 2026 - At the opening of this morning's session, oil prices are observed to move with a bullish correction triggered by the increasing risk of escalation of tension in the Strait of Hormuz following the Trump Project Freedom plan. On the other hand, the confirmation of OPEC+ production increase limits further price movement.
Iranian parliament's national security commission chief, Ebrahim Azizi, warned on Sunday that any US intervention in the Strait of Hormuz would be considered a breach of the ceasefire. The warning was issued following Trump's announcement that on Monday morning, the US would initiate the "Project Freedom" to free ships stranded in the Strait of Hormuz, deploying 15,000 US military personnel, more than 100 land and sea-based aircraft, as well as warships and drones.
Also from the Middle East, a tanker was reportedly hit by an unknown projectile while passing approximately 78 nautical miles north of Fujairah city in the United Arab Emirates, said the UK Maritime Trade Operations (UKMTO) 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, added UKMTO.
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 bpd in June, from additional voluntary production adjustments in April and November 2023. The decision indicates that the producer alliance will continue to increase production despite the UAE's exit, said an OPEC+ source.
Adding to the price pressure, Iraqi Deputy Minister of Oil Basim Mohammed stated on Saturday that he is optimistic that Iraq's 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 reaches 1.5 million bpd, with about 200,000 bpd exported through Ceyhan, while two tankers have been prepared and two more are expected to arrive depending on security conditions in the strait.
From a technical perspective, oil prices potentially face the nearest resistance at $104 per barrel. However, if negative catalysts appear, prices could fall to the nearest support at $99 per barrel.