A drone attack on a Kuwaiti oil tanker, the Al-Salmi, at its anchorage in the Port of Dubai, sent ripples through already volatile global oil markets on Tuesday, as President Donald Trump signaled a potential shift in U.S. Strategy regarding the escalating conflict in the Persian Gulf.
The attack, which caused hull damage to the fully loaded supertanker, occurred amidst a fifth week of hostilities that have effectively closed the Strait of Hormuz, a critical artery for global oil supplies. Brent crude for May delivery traded near $119 a barrel, poised for a record monthly increase exceeding 60%, representing the most severe energy supply shock in recent history. The more actively traded June contract rose to approximately $108 a barrel.
President Trump, in a social media post, reportedly told allies struggling to secure fuel supplies through the Strait of Hormuz to “take it,” asserting the U.S. Had sufficiently degraded Iran’s military capabilities. According to reports in the Wall Street Journal, Trump has informed his advisors of his willingness to consider ending the military campaign even if the Strait remains closed, concluding that reopening the waterway would be a protracted undertaking.
The administration is now reportedly prioritizing the crippling of the Iranian navy and missile stockpiles before scaling back current operations. This potential shift in strategy comes as energy prices surge, with U.S. Gasoline prices exceeding $4 a gallon for the first time since August 2022, a development that poses a significant political challenge for the Trump administration as midterm elections approach.
“I consider we are approaching a scenario of exiting the conflict faster than many people think,” said Christoph Ebel, chief executive and co-founder of Tiberius Group, in an interview with Bloomberg Television. “There is a possibility of a quick operation, quick entry, making some noise, blowing something up,” he added, suggesting a potential strategy for the U.S. To extract itself from the conflict.
The conflict has already led to disruptions beyond the Strait of Hormuz. Iran-backed Houthi rebels in Yemen launched missile attacks against Israel over the weekend, and Tehran is reportedly exploring options for a campaign targeting shipping in the Red Sea, potentially threatening alternative oil supply routes. Simultaneously, Israeli forces launched a new wave of strikes on targets within Iran, while Saudi Arabia intercepted and destroyed incoming drones.
A joint U.S.-Israeli strike reportedly targeted Bahman port on the eastern side of Qeshm Island, according to Iran’s semi-official Mehr news agency. These escalating military actions are occurring alongside fluctuating public statements from President Trump, who has both claimed the war is nearing its finish and threatened to escalate operations, including potential strikes on Iranian power plants, oil facilities, and desalination infrastructure should Tehran fail to reopen the Strait of Hormuz.
U.S. West Texas Intermediate (WTI) crude has also experienced a significant increase, rising by more than 50% this month – its largest monthly gain since May 2020. Market participants remain on edge regarding the continued buildup of U.S. Forces in the region and the possibility of deploying ground troops into Iran.
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, described the situation as characterized by “slight progress followed by successive setbacks.” She noted that with “between 10 to 12m barrels per day effectively missing from the market, spare margins are vanishing and talk of lower oil prices is becoming less effective.”
As of Tuesday evening, the U.S. State Department had not issued a formal response to the attack on the Al-Salmi, nor had it clarified the timeline or parameters of any potential shift in military strategy. Diplomatic efforts to de-escalate the situation remain stalled, with no confirmed negotiations scheduled between U.S. And Iranian officials.
