President Trump plans to ‘free’ ships stranded in Middle East conflict, causing oil prices to fall on unstable trade

Oil prices fell in choppy trade on Monday as market participants assessed US President Donald Trump’s announcement to “free” ships trapped by the closure of the Strait of Hormuz amid lingering tensions between Iran and Washington.

International benchmark Brent crude oil futures fell 0.35% to $107.77 a barrel, while U.S. West Texas Intermediate futures fell 0.57% to $101.31 a barrel.

As the Strait of Hormuz continues to face a blockade, traffic through the vital energy waterway, through which around a fifth of the world’s energy supplies passed before the war, has come to a near standstill.

A tanker was hit by a projectile north of the United Arab Emirates city of Fujairah, Britain’s Maritime Trade Agency said on Monday, underscoring the dangers of shipping in the Middle East.

President Trump said in a Truth social post on Sunday that the United States will try to “free” the first cargo ship stranded in the aftermath of the closure of the Strait of Hormuz since the start of the Iran war.

The initiative, dubbed Project Freedom, will primarily focus on getting civilian ships registered from countries not involved in the conflict out of the waterways so they can “operate freely and competently.” It is scheduled to start on Monday.

“U.S. military support for Project Freedom includes guided missile destroyers, more than 100 land- and sea-based aircraft, multi-domain unmanned platforms, and 15,000 military personnel,” U.S. Central Command said shortly after Trump’s announcement.

Traders will also take stock of OPEC+’s agreement to increase production by 188,000 barrels a day in the cartel’s first meeting since the withdrawal of its main member, the United Arab Emirates.

Gaurav Ganguly, head of global economics at Moody’s Analytics, warned on CNBC’s “Squawk Box Asia” about the impact of the protracted Middle East conflict on the global economy as oil prices remain high.