Trump plans coalition to escort ships through Strait of Hormuz
Military intervention aims to secure critical oil route amid rising supply disruption risks
The Trump administration is preparing to announce an international coalition to escort commercial ships through the Strait of Hormuz, a critical oil shipping route that has become increasingly vulnerable amid escalating tensions between the United States, Israel and Iran. Treasury Secretary Scott Bessent stated that the U.S. Navy, possibly with international partners, intends to escort vessels through the waterway as soon as it is militarily feasible.
The strait handles approximately 20 million barrels per day of crude oil and petroleum products, representing roughly 20% of global oil consumption and 25% to 27% of all seaborne oil trade worldwide. About 80% to 89% of these shipments are destined for Asian markets, with China, India, Japan and South Korea accounting for the majority of flows.
Oil markets have already priced in significant geopolitical risk. West Texas Intermediate crude is trading near $96–$99 per barrel, while Brent crude sits around $101–$104 per barrel. Prices surged as high as $118 per barrel in the aftermath of recent Middle East conflicts, with analysts estimating that geopolitical factors have added a premium of $4 to $10 per barrel.
The Energy Select Sector SPDR Fund (XLE) has surged 26.5% year-to-date, while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has gained 29.92% over the same period. Individual oil producers have rallied sharply, with Occidental Petroleum up 40.7% year-to-date and Chevron hitting fresh all-time highs after climbing nearly 30% in 2026.
Not all energy companies have benefited equally. Schlumberger (SLB) shares have declined 11.2% over the past month after warning that its first-quarter revenue would fall below expectations due to operational disruptions and project curtailments in the Middle East.
The U.S. Energy Information Administration has sharply increased its 2026 price forecasts, raising its Brent projection to $78.84 per barrel from $57.69, while WTI was revised to $73.61 from $53.42. The agency expects Brent to average approximately $91 per barrel in the second quarter due to immediate supply disruptions, before potentially declining to around $70 by the fourth quarter assuming a return to normal oil flows.
Elevated energy prices are threatening to push inflation higher. Economists estimate that a 5% increase in oil prices translates to a 0.1% increase in overall inflation. If WTI crude settles at $100 per barrel, inflation could rise by 0.7 percentage points, potentially pushing headline inflation above 3.5% in the second quarter of 2026.
For American households already spending an average of $2,500 annually on fuel, sustained higher energy costs act like a tax on purchasing power, diverting income away from other goods and services. The ripple effects extend throughout the economy, raising transportation and production costs that ultimately feed into higher prices for food and other consumer goods.
The success of any coalition effort to secure shipping through the Strait of Hormuz will be critical in determining whether the current geopolitical risk premium in oil markets proves temporary or becomes a persistent feature of the energy landscape.