Trump's proposed Hormuz fee raises concerns over oil supply stability
Analysts say a 20% levy on vessels transiting the Strait of Hormuz could add $16 per barrel to costs and heighten risks of supply disruptions, potentially affecting global oil prices.
President Donald Trump has suggested a 20% fee on cargoes passing through the Strait of Hormuz, a move that could add roughly $16 per barrel to crude shipped via the waterway, according to industry estimates. While the direct cost impact is modest, the proposal signals heightened risk of shipping disruptions that could undermine recent expectations of an oil surplus.
Andy Lipow, president of Lipow Oil Associates, told CNBC that market optimism following a recent U.S.-Iran memorandum of understanding has faded, noting that "those surpluses are certainly in jeopardy, especially if the strait would completely shut down."
Citi analysts warned that implementing the fee could increase the likelihood of military escalation and raise the chance that Iran might abandon the memorandum, potentially keeping oil prices higher for a longer period.
Henry Hoffman, co-portfolio manager at Catalyst Energy Infrastructure Fund, said the immediate effect would support oil prices, but the more consequential risk is a renewed loss of physical supply. He noted that vessel traffic through the strait dropped sharply, with only 14 ships recorded on Sunday compared with 37 a week earlier, raising concerns that storage capacity could fill and force producers to curtail output.
The International Energy Agency had recently projected a return to global oil surplus by late 2026, assuming a recovery in tanker traffic. However, analysts caution that a rebound in Asian demand could coincide with renewed uncertainties in Middle Eastern supply, especially as Saudi Aramco has cut prices and shifted pricing structures for its Asian crude grades.