A drone view of the HELGA oil tanker stands at one of Iraq’s southern oil facilities near Basra as it prepares to load crude oil, the second vessel to arrive since the closure of the Strait of Hormuz, April 24, 2026.
Mohammed Athi | Reuters
President Donald Trump’s plan to impose a 20% tariff on goods passing through the Strait of Hormuz threatens the world’s oil surplus, especially if renewed fighting closes the vital waterway again.
Analysts say the proposed tax has less to do with its direct costs than it reflects: the growing risk that disruptions to shipping could lead to shortages, rising even with forecasts of more money made earlier this month.
Andy Lipow, president of Lipow Oil Associates, said on CNBC’s “Squawk Box Asia” that the market had hoped for stronger supplies following the US-Iran cooperation memorandum signed last month, but that hope is over.
“Those remains are at risk, especially if the current is completely closed.”
Lipow estimates that Trump’s proposed money, if applied to crude oil, would effectively add $16 a barrel to oil shipped, although the administration has not yet specified how the charge would be made.
Oil prices year to date
Citi warned that using this money could increase the likelihood of military conflict in the short term.
“It is our view that the risk of military escalation has increased significantly should this announcement be made,” Citi wrote in a letter published early Tuesday.
“The chances of the Iranian regime abandoning the MoU in the middle of the US election have also grown, a scenario that could increase long-term oil prices,” Citi analysts added.
Although the proposed tax will increase the cost of shipping, some experts say that investors are increasingly focused on the possibility that increased friction could remove barrels from the market altogether.
“The current impact is supporting oil prices, but the most important issue is the risk of a renewed material loss,” said Henry Hoffman, portfolio manager at the Catalyst Energy Infrastructure Fund.
US West Texas Intermediate futures for August delivery rose 2.27% to $79.91 per barrel. International benchmark Brent crude futures for September delivery rose 2.14% to $85.11, extending gains after advancing 9.6% in the previous session.
A drop in ship traffic in the Strait
Hoffman warned that the decline in shipping rates could eventually force producers to reduce output if storage becomes full because crude will no longer be able to be exported. Vessel traffic in the Strait of Hormuz dropped significantly on Sunday, with Kpler data showing only 14 vessels crossing the waterway, including four crude tankers, compared to 37 vessels the previous week.
If exporters can’t ship crude from the Gulf, storage tanks could end up filling up, leaving producers with no choice but to temporarily halt production, Hoffman said. “That makes the loss of operational supply much greater than can be measured by looking at damaged infrastructure.”
The latest development will also undermine expectations by the International Energy Agency and others that global oil markets will remain comfortably supplied. The IEA last week said it expects the oil market to return to surplus by late 2026, although the outlook hinges on tanker shipments slowing down.
Timing could be particularly challenging if demand in Asia rebounds just as supplies in the Middle East are less reliable, he added. “Saudi Arabia recently moved its first Asian grade from surplus to discount, which should encourage Chinese refiners to increase purchases after imports fell sharply during the initial disruption.”
Saudi Aramco recently cut prices by $11 per barrel to a $1.50 discount to the Oman/Dubai benchmark.
“In other words, Chinese demand may begin to recover just as Middle East supply reliability deteriorates again.”
