Oil pulls back after hitting a 2026 high on day one of Trump’s plan to unblock Hormuz

By John Liu, Hanna Ziady, CNN

(CNN) — Oil prices fell Tuesday after posting sharp gains at the start of the week as fresh attacks in the Gulf raised doubts about the durability of a ceasefire between the United States and Iran.

Brent crude, the global oil benchmark, was down 1.4% to $112.9 a barrel early in the US morning, after jumping 5.8% on Monday to settle at $114.4 –– its highest closing price in 2026. West Texas Intermediate (WTI), the US benchmark, declined 2% to $104.2 a barrel, having gained 4.39% to close at $106.42 on Monday.

US President Donald Trump’s new plan to guide ships through the blocked Strait of Hormuz was met with renewed Iranian attacks in the Gulf, including on a major oil port in the United Arab Emirates. Both sides are looking to “exert influence” over the strait, Deutsche Bank analysts wrote in a note.

“Oil markets also moved to price rising risks of persistent disruption,” the analysts added. They noted that Brent futures contracts for delivery of physical crude in 6 months’ time posted their largest daily increase since March 2022 on Monday to reach $91.99 a barrel.

The United States is not immune from the energy shock, despite being the world’s largest oil producer. The average national price of a gallon of gasoline rose to $4.48 Tuesday, from an average of $2.98 a gallon before the war started, according to AAA.

US gas prices could hit $5 a gallon should the Strait of Hormuz remain closed next month, according to Andy Lipow, president of consulting firm Lipow Oil Associates. That spike would nearly match the record high of $5.02 a gallon reached in June 2022, following Russia’s full-scale invasion of Ukraine.

The recent high prices come as Trump has sought to free up the flow of oil tankers through the Strait of Hormuz, ordinarily a conduit for around a fifth of global oil and natural gas supply. The strait has been effectively shuttered by Tehran since the United States and Israel launched attacks on the country on February 28.

While some producers, including Saudi Arabia and the United Arab Emirates, have found alternative routes for their exports, around 10-12 million barrels of crude remain choked off from global markets, according to analysts.

Trump’s new initiative, dubbed “Project Freedom”, began on Monday to “guide” ships through the critical oil and gas shipping channel. But there was no major pickup in shipping traffic –– only four ships crossed the strait yesterday, according to S&P Global Market Intelligence.

Before the war, more than 120 ships a day on average passed through the vital waterway.

Several commercial vessels and a major oil port in the United Arab Emirates were also hit on Monday, as the US destroyed some Iranian boats –– the largest escalation in fighting since the temporary ceasefire began four weeks ago.

The fire traded between the US and Iran put the fragile ceasefire between the two countries under strain, as Trump declined to say whether the truce was still in effect.

The US and Israel’s decision to go to war with Iran has sparked a historic oil crisis with countries around the world, including many key US allies in Europe and Asia, now facing soaring fuel prices and surging costs.

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CNN’s Matt Egan contributed to this report.