Oil eases on signs U.S. is loosening Iranian closure of Strait of Hormuz

Oil prices eased on Tuesday after signs that U.S. military support was helping merchant vessels move through the Strait of Hormuz, reducing immediate fears of a supply disruption.

U.S. Central Command said on May 3 that it would support Project Freedom, an effort aimed at restoring freedom of navigation for commercial shipping through the strait. CENTCOM later said two U.S.-flagged merchant vessels successfully transited the waterway with military support.

Maersk said the U.S.-flagged Alliance Fairfax exited the Gulf via the Strait of Hormuz accompanied by U.S. military assets. Reuters reported that the transit helped calm the market after oil prices had surged in the prior session.

The Strait of Hormuz is a vital shipping lane for global energy supplies, so even limited signs of safer passage can move crude prices quickly. Traders are now watching whether more commercial vessels will attempt the route under U.S. protection and how Iran responds.

The market reaction may prove temporary if the security picture changes again, but for now the escort has eased some of the immediate pressure on oil prices.