Brent crude futures rose 2.3% to $110.64 per barrel in Monday trading, while WTI climbed to $102.24, after the U.S. Navy announced Operation Sentinel Passage — a new freedom-of-navigation mission through the Strait of Hormuz involving the USS Dwight D. Eisenhower carrier strike group and a multinational coalition of 12 allied navies. The operation represents the most direct challenge to Iran's effective blockade of the strait since the conflict began on February 27.
The International Energy Agency has characterized the Hormuz disruption as 'the largest supply disruption in the history of the global oil market,' with approximately 20% of global crude flows and significant LNG volumes effectively cut off since Iran's initial mine-laying operations in mid-March. The U.S. has established an 'enhanced security area' south of usual shipping lanes to guide vessels safely, but commercial shipping traffic remains at roughly 30% of pre-conflict levels.
Iran's Peace Proposal
Iran made public a 14-point peace proposal over the weekend calling for the U.S. to lift sanctions, end its naval blockade, withdraw forces from the region, and cease all hostilities. The proposal seeks to resolve all issues other than nuclear negotiations within 30 days. The State Department described the proposal as 'not a serious starting point' while leaving the door open to indirect talks through Omani intermediaries.
Energy Market Impact
Brent crude has surged more than 55% since the war began, hitting nearly $120 a barrel at its April peak. U.S. gasoline prices have climbed to nearly $3.00 per gallon nationally — up from $2.60 pre-conflict. The World Bank warned last week that energy prices are projected to surge 24% this year to their highest level since Russia's 2022 invasion of Ukraine. Oil options markets reflect elevated tail risk: the WTI 25-delta risk reversal sits at a 3.4-vol skew toward calls, the steepest since February 2022.
Outlook
ING revised its Q2 2026 Brent forecast to $108-115 per barrel from $95, citing 'no near-term resolution pathway' for the Hormuz disruption. Goldman Sachs energy strategist Daan Struyven maintained his year-end Brent target of $95, predicated on a diplomatic resolution by Q3. The next catalysts are Tuesday's OPEC+ emergency meeting and Wednesday's EIA inventory data, which is expected to show a 4.2 million barrel draw from U.S. commercial stocks.