Oil surges past $114 as Trump proposes joint Iran control of Hormuz
Unilateral concession suggestion comes amid 11 million barrel daily supply disruption from closed strategic waterway
Brent crude surged past $114 per barrel on Tuesday, briefly touching $119, as President Donald Trump proposed sharing control of the Strait of Hormuz with Iran in an extraordinary diplomatic overture aimed at resolving a conflict that has crippled global energy supplies. West Texas Intermediate crude climbed above $95, carrying an estimated $8 to $12 per barrel geopolitical risk premium as markets assessed the implications of Trump's suggestion that the strategic waterway could be "jointly controlled. Maybe [by] me. Maybe me. Me and the Ayatollah, whoever the Ayatollah is."
The remarks, delivered Monday as part of a de-escalation effort following Trump's weekend threat to "obliterate" Iran's electrical grid unless the strait reopened, represent a potentially significant concession to Tehran. The Strait of Hormuz handles approximately 20% of global oil shipments, yet has been largely closed since late February amid a broader conflict involving US-Israeli strikes on Iran. Iranian officials have denied any direct communications with Washington, characterizing Trump's announcement as an effort to "buy time" for military objectives.
The disruption has removed approximately 11 million barrels per day from global markets, exceeding previous oil crises according to the International Energy Agency. In response, IEA member countries have agreed to release a record 400 million barrels from strategic reserves to stabilize markets. LNG supplies have also been reduced by roughly 20%, with Qatar's Ras Laffan facility reportedly offline following an attack.
Technology infrastructure has not been immune to the regional turmoil. Amazon Web Services confirmed fresh disruptions to its Bahrain data center region on Tuesday, linked to ongoing drone activity in the Gulf. This marks the second major AWS outage this month after earlier incidents in the United Arab Emirates where facilities were struck by unidentified objects causing fires and power outages.
Despite Trump's five-day postponement of threatened strikes on Iranian power plants, Iranian attacks have persisted across the region. Bahrain has reported intercepting hundreds of missiles and drones since late February, while Iranian forces continue targeting airports, energy facilities, and military bases throughout Gulf states. The conflict has resulted in over 2,000 casualties and the death of former Iranian Supreme Leader Ayatollah Ali Khamenei.
Financial markets showed mixed reactions to Trump's overture. The Dow Jones Industrial Average jumped more than 600 points on news of the strike postponement, though oil prices remained elevated as traders awaited evidence of actual de-escalation. Iran's control over the strait has established what analysts describe as a "de facto 'safe' shipping corridor" through Iranian territorial waters, a situation that represents a major embarrassment for Washington's ability to guarantee security in a critical maritime chokepoint.
The proposed joint control arrangement, if implemented, would mark a fundamental shift in regional power dynamics, effectively recognizing Iranian sphere of influence over one of the world's most critical energy transit points. Any move toward formalized cooperation would face significant hurdles, including opposition from traditional US allies in the Gulf and congressional resistance to granting Tehran leverage over global energy markets.