Hormuz in Crisis, US Reinstates Blockade

The Strait of Hormuz has returned to acute crisis, reversing weeks of cautious normalization in one of the most turbulent sequences the global energy market has seen since the war began in February. President Donald Trump notified Congress on July 13 that US forces had resumed strikes against Iran after the ceasefire effectively collapsed, declared the United States the "Guardian of the Hormuz Strait," reinstated the naval blockade on Iranian shipping, and simultaneously announced a 20% transit toll on all cargo shipped through the waterway. Less than 24 hours later, on July 14, Trump dropped the toll but kept the blockade in place.

The Iranian military pushed back sharply, issuing a statement declaring that the United States would not be permitted to play any role in managing the strait. Iran had previously declared the strait closed after rejecting American demands that it publicly guaranteed the waterway's opening.

The 20% Toll: Announced Monday, Dropped Tuesday

Trump's initial announcement came via Truth Social, where he wrote that Washington would be reimbursed at a rate of 20% on all cargo shipped through the strait to cover the costs of providing security in the waterway, and that the process would begin immediately. He did not explain how the charge would be calculated, collected, or enforced. Before the current conflict began in late February, the strait had handled approximately one-fifth of global daily oil and liquefied natural gas supplies, a scale that made the proposal immediately consequential for shippers worldwide.

The announcement drew swift pushback. The International Maritime Organization stated that it opposes fees imposed on vessels passing through international maritime waterways, though it had been waiting for further US detail before Trump withdrew the proposal. Hapag-Lloyd described the fee as fundamentally wrong, arguing that international straits should remain open without transit charges, while the German Shipowners' Association warned the measure could be legally impermissible and could set a precedent for fees in other strategic waterways. Industry representatives also drew a distinction between Hormuz and artificial waterways such as the Panama and Suez canals, where tolls fund infrastructure that Hormuz, as a natural strait, does not require.

Within 24 hours, Trump abandoned the toll, saying on Truth Social that he had decided to replace the 20% fee with trade and investment deals that Gulf states would make into the United States, characterizing the prospective investments as massive without identifying which countries had committed, their value, or a timeline. The naval blockade on Iranian ports went into effect as planned at 4 p.m. ET on July 14, with Trump specifying that the blockade would apply only to ships coming to or from Iranian ports, or carrying Iranian cargo, meaning vessels moving non-Iranian goods would not face the withdrawn charge. The episode confirmed a pattern already visible in the underlying conflict: Trump's most dramatic Hormuz announcements are made on social media without operational detail and then modified under market and diplomatic pressure within hours, while the military confrontation with Iran continues underneath the policy noise.

The Ceasefire That Never Was

The current escalation traces directly to the June memorandum of understanding between the US and Iran, an agreement that included language both sides have disputed ever since over who controls traffic through the strait. Reinstating the blockade amounts to surrendering what had been Washington's most significant olive branch to Tehran. The flare-up began after Iran seized a Cypriot-flagged vessel as a pretext, claiming the container ship had failed to comply with Tehran's rules for passing through the strait. Traffic data captured the deterioration in real time: only six vessels transited the strait on July 12, the lowest daily level recorded in five weeks, according to ship-tracking data, and Sunday saw only 14 vessels make the passage, a monthly low, according to satellite-tracking firm Kpler.

That vessel-count figure is the most concrete market indicator of actual Hormuz status. In normal conditions, approximately 20 to 21MMboe transit the strait daily across dozens of vessels. A daily count in the single or low double digits represents near-complete closure, a physical reality that paper crude markets have struggled to price amid the diplomatic noise. US Central Command has said it carried out a broad campaign of strikes against Iranian targets, including air defenses, coastal radar, and dozens of Revolutionary Guard small boats, while Washington revoked the license that had permitted Iranian oil exports. Iran responded with drone and missile attacks on Jordan, Bahrain, Kuwait, and Oman, all of which said their air defenses intercepted the incoming munitions with no casualties reported.

What This Means for Oil Markets

Oil markets reacted quickly. Brent crude jumped about 5% to approach the US$80/b mark following the initial blockade and toll announcement, while West Texas Intermediate rose by more than 3% to around US$73.58/b on the same news, with both benchmarks climbing more than 4% earlier in the session. Brent subsequently climbed above US$86/b during trading on July 14 as continued attacks on vessels and US military operations sustained supply concerns, before oil prices trimmed some gains once Trump withdrew the fee proposal, though prices remained supported by uncertainty over tanker safety and the trajectory of US-Iran negotiations. At the pump, American drivers were paying an average of US$3.87 per gallon, seven cents more than the same time the previous week.

The scale of the underlying demand damage was already documented before this latest escalation. The International Energy Agency's July 10 Oil Market Report found that global oil demand is on track to contract by 1MMb/d this year, the first annual decline in consumption since the pandemic-driven collapse of 2020, and a downgrade of 700Mb/d compared with the agency's May report. Second-quarter deliveries plunged by 5MMb/d year-on-year as higher fuel prices and disrupted product availability took hold. A partial reopening of the strait had allowed global production to rebound by 4.1MMb/d in June, though output remained 9.4MMb/d below pre-war levels, and the IEA's own language anticipated exactly the kind of reversal now underway, warning that renewed exchanges of fire in the Gulf highlighted the risks of failing to reach a lasting peace agreement, a condition the agency called a prerequisite for market normalization. Compounding the fragility, global observed oil stocks have been declining by an average of 3.8MMb/d since the war began, with OECD government inventories falling to their lowest level since December 1990 as emergency stock releases accelerated to offset shortages.

Mexico’s Fiscal Reset

For Mexico, the sequence is the most consequential oil market development since the original February outbreak of hostilities. The SHCP's fiscal planning had been calibrated to a gradual price normalization: the 2027 Pre-Criteria had revised the 2026 oil price assumption upward to US$77.3/b in April, but with Brent falling back toward US$72/b in late June and early July, actual second-half revenues had appeared likely to track below even that revised figure.

The reinstated blockade changes that calculus. Brent at or above US$80/b, if sustained, returns Mexico to a price environment above both budget references. But the volatility that produces a 5% spike on Monday and a reversed policy on Tuesday is precisely the condition that makes fiscal planning most difficult, since the average price Mexico actually captures over a full quarter is determined by the trajectory of dozens of daily settlements rather than by the announcement-day spike. PEMEX's structural constraint compounds the problem: the company exported approximately 431Mb/d in the January-May period, roughly 20% below the SHCP's annual target, meaning any given price level generates less fiscal benefit than the headline figure implies. At US$80/b with current export volumes, the revenue impact is positive but meaningfully below what it would be at the SHCP's target export rate.

The IEA's warning that renewed exchanges of fire underscore the risks of not reaching a lasting peace agreement is now the most operationally relevant framing for Mexico's energy and fiscal planning. A temporary ceasefire followed by renewed hostilities, a partial opening, fresh escalation and a toll announced and withdrawn within a single day, is not a trajectory toward the stable oil price environment the SHCP needs to close the fiscal year within its projected parameters. Longer term, Goldman Sachs has estimated that expanded pipeline capacity bypassing Hormuz could protect more than 60% of pre-war Gulf oil exports by the end of 2028, a structural shift that, if realized, would reduce the strait's centrality to global supply, but that timeline offers no relief for Mexico's fiscal year currently in progress.