US Pauses Hormuz Escorts on Iran Deal Hopes, Oil Jumps 3%

President Donald Trump paused a US-led naval operation to escort commercial ships through the Strait of Hormuz, citing “major progress” in peace talks with Iran and sending Brent crude prices jumping $3.06 to $111.23 a barrel.

The move introduces a complex new dynamic to the month-old, fragile ceasefire. “The cease-fire is not over,” Defense Secretary Pete Hegseth said at a Pentagon briefing Tuesday, clarifying that the escort mission, dubbed “Project Freedom,” was a temporary measure separate from the broader conflict and that US forces remain “locked and loaded.”

The suspension follows a sharp escalation in the waterway, with the US military destroying at least six Iranian small boats in recent days after Iran fired missiles at ships being protected by the US Navy. Iran also launched a second day of missile and drone attacks against the United Arab Emirates, a key US ally, whose defense ministry reported engaging 12 ballistic missiles, three cruise missiles, and four drones.

At stake is the passage through a waterway that handles roughly one-fifth of the world’s oil supply and has been virtually shut by Tehran since hostilities with the US and Israel began on February 28. The disruption has left more than 1,550 commercial vessels waiting to transit, according to Gen. Dan Caine, chairman of the Joint Chiefs of Staff. While Trump’s decision was made at the request of Pakistan and other intermediaries to see if a final agreement can be reached, the US blockade of ships going to and from Iranian ports will “remain in full force and effect.”

Mixed Signals Amid Fragile Truce

The diplomatic overture contrasts sharply with the recent military volatility and Washington's own rhetoric. Just a day prior, President Trump warned that any Iranian interference with the humanitarian escort process would be “dealt with forcefully” and told Fox News that Iranian boats targeting US ships would be “blown off the face of the Earth.”

Iran’s negotiators have publicly insisted on separating talks over freedom of navigation from core disputes, including its uranium enrichment program. Yet, Iranian Foreign Minister Abbas Araghchi acknowledged on social media that “talks are making progress with Pakistan’s gracious effort,” while also calling Project Freedom a “Project Deadlock.” This diplomatic track runs parallel to continued threats, with Iranian parliament speaker Mohammad Bagher Ghalibaf warning that US actions were jeopardizing shipping security.

Regional Allies on High Alert

The renewed attacks on the UAE have put regional US allies on high alert. The UAE’s foreign ministry condemned the attacks as a direct threat to its security and reserved its “full and legitimate right” to respond. In a show of solidarity, UAE President Sheikh Mohammed bin Zayed Al Nahyan received calls from regional leaders, including Israeli Prime Minister Binyamin Netanyahu, condemning the Iranian attacks on civilian facilities.

The escalation has drawn concern from other nations, with South Korea saying it would “review its position” on joining the US-led maritime mission after a South Korean-flagged cargo ship, the HMM Namu, was damaged by an explosion in the strait. While all 24 crew members were unharmed, the incident underscored the widespread risk to international shipping.

This article is for informational purposes only and does not constitute investment advice.