The global economy is facing strain due to disruptions in the Strait of Hormuz, a critical waterway. This has led to soaring prices for gasoline, jet fuel, and diesel, alongside declines in stock markets and increased recession concerns.

Trump's Proposed Withdrawal

President Donald Trump has suggested the United States should withdraw from efforts to reopen the Strait of Hormuz, located off the coast of Iran. He stated on Tuesday, in an interview with the New York Post, that the waterway would “automatically open” once the US military departs. “Let the countries that are using the strait, let them go and open it,” Trump said.

According to the Wall Street Journal, Trump has indicated a willingness to end the US military campaign against Iran even if the Strait remains largely closed. He expressed this sentiment on Truth Social, stating, “Go get your own oil!” He later told reporters that gas prices, which reached $4 a gallon on Tuesday for the first time since 2022, would decrease upon a US withdrawal from Iran.

Expert Concerns

However, energy market experts disagree with Trump’s assessment. Dan Pickering, founder and chief investment officer at Pickering Energy Partners, called the idea “a terrible idea,” warning it would create more long-term problems. He fears the world will ultimately pay more for crude oil if Iran controls the Strait of Hormuz.

Patrick De Haan, head of petroleum analysis at GasBuddy, described a US withdrawal as “a catastrophic failure,” arguing it would essentially surrender control of the Strait to Iran and guarantee higher energy prices. Even former Trump administration official Dan Brouillette, former Energy Secretary, believes leaving the region without reopening the Strait would be “highly problematic.”

Potential Motivations and Market Reactions

Some speculate Trump’s proposal is a tactic to encourage allies to increase their support in reopening the chokepoint, or a deliberate misdirection before a potential US ground invasion. Art Hogan, chief market strategist at B. Riley Financial, dismissed the talk as a “petulant outburst.”

Oil market veterans emphasize that the current supply disruption – the largest on record – requires a resolution to the effective shutdown of the Strait of Hormuz, which typically handles about a fifth of the world’s oil supply.

US Reliance on Global Markets

While the United States is a major oil producer, currently pumping 13.6 million barrels per day, it remains connected to the global market. Vikas Dwivedi, global oil and gas strategist at Macquarie Group, stated, “We’re inextricably linked to the global price.”

US refiners blend domestic oil with heavier crude imported from overseas, with hundreds of thousands of barrels entering the country daily, particularly along the East and West Coasts. The US also imports significant amounts of finished energy products like gasoline and jet fuel. Claudio Galimberti, chief economist at Rystad Energy, noted that California and the New York region are particularly dependent on product imports.

Long-Term Implications

If the Strait of Hormuz remains closed, buyers may turn to US oil, potentially driving up domestic prices. Bob Yawger, commodity specialist at Mizuho Securities, explained that US producers would prioritize selling to the highest bidder. A geopolitical risk premium would likely be added to oil prices, further increasing costs for consumers worldwide, according to Andy Lipow, president of Lipow Oil Associates.

Trump recently indicated reopening the Strait remains a priority, even suggesting potential military action against Iran if it isn’t opened. However, analysts like Bob McNally, president of Rapidan Energy Group, believe a US withdrawal would only provide a temporary reprieve from high prices. He emphasized, “It doesn’t end the crisis.”

Ultimately, experts agree that leaving the Strait of Hormuz in a precarious state risks exacerbating the global energy crisis and continuing financial hardship for consumers.