Trump Floats Withdrawing from Strait of Hormuz as Oil Prices Surge and Global Markets Tremble

Global energy markets are on the brink of collapse as the de facto closure of the Strait of Hormuz—through which nearly one-fifth of the world’s oil passes—drives gasoline prices to their highest levels since 2022 and sends shockwaves through financial markets. On Tuesday, President Donald Trump proposed a radical and controversial solution: withdraw all US military forces from Iran immediately, arguing that the Strait would “automatically open” once American troops left. Trump’s remarks, made in interviews with the New York Post and during a press briefing, came as the national average for a gallon of regular gasoline hit $4.00, fueling fears of a prolonged economic slowdown and recession. Yet energy analysts, former officials, and market strategists across Wall Street and beyond warn that such a move would fail to resolve the underlying supply crisis—and could instead empower Iran to exert even tighter control over global oil flows.

• US gasoline prices reached $4 per gallon in late June 2024, the highest since 2022, reflecting global oil supply disruptions.
• President Trump suggested ending the US military presence in Iran without reopening the Strait of Hormuz, claiming the waterway would 'automatically open' after withdrawal.
• Energy experts and former officials argue that abandoning the region would not stabilize prices and could worsen long-term geopolitical and economic risks.
• The Strait of Hormuz, a critical chokepoint, handles about 20% of global oil supply, making its closure the largest supply disruption in decades.
• US oil refiners depend on imported crude and refined products, exposing American consumers to global price shocks even as the US is the world’s top oil producer.

Why the Strait of Hormuz Is the World’s Most Critical Oil Chokepoint

The Strait of Hormuz is not just another maritime route—it is the single most vital artery of the global energy system. Located between Oman and Iran, this narrow waterway connects the Persian Gulf to the Gulf of Oman and the Arabian Sea, serving as the only sea passage for oil exports from Saudi Arabia, Iraq, the UAE, Kuwait, and Iran itself. Approximately 21 million barrels of crude oil pass through the strait daily, representing nearly 20% of global oil supply. When this flow is disrupted, the consequences ripple across every continent. The last sustained closure of the strait, during the 1980s Iran-Iraq War, triggered oil price spikes that contributed to the 1990s energy crises. Today, with geopolitical tensions already elevated by the war in Ukraine and conflicts in the Middle East, a prolonged closure risks triggering a full-blown energy shock.

The Rise of Iran’s Maritime Leverage in the 21st Century

Since the 2018 U.S. withdrawal from the Iran nuclear deal and the reimposition of sanctions, Iran has increasingly used the Strait of Hormuz as a pressure point. In 2019, Iran seized a British-flagged oil tanker and conducted drone and missile attacks on Saudi oil facilities, temporarily halving the kingdom’s output. In 2021, Iran targeted Israeli-linked ships in the strait, and in April 2024, Iran seized an Israeli-owned container ship, escalating tensions to their highest point in decades. These actions are part of Iran’s ‘maximum pressure’ strategy, aimed at extracting concessions from the West without triggering a full-scale war. The latest round of tensions began after Iran launched a direct attack on Israel in April 2024, prompting retaliatory strikes and a rapid U.S. military buildup in the region.

Trump’s Proposal: Withdraw Without Securing the Strait

In a Tuesday interview with the New York Post, President Trump argued that the U.S. should exit its military mission in Iran and allow regional allies to handle the Strait of Hormuz issue. 'Let the countries that are using the strait, let them go and open it,' he told the paper. Trump reiterated this stance in a Truth Social post, writing, 'Go get your own oil!' and claiming that gasoline prices would fall 'very soon' once the U.S. military left Iran. In a press briefing later that day, he stated, 'All I have to do is leave Iran, and we’ll be doing that very soon, and they’ll come tumbling down.' The president’s comments suggest a dramatic shift from his previous hardline stance on Iran, including threats in a Monday Truth Social post to 'obliterate all of their Electric Generating Plants, Oil Wells and Kharg Island' if the strait wasn’t immediately reopened.

Energy Experts Warn of Catastrophic Consequences of a US Withdrawal

Despite Trump’s optimism, energy market analysts and former officials are unanimous in their assessment: walking away from the Strait of Hormuz without securing its reopening would be a strategic and economic disaster. Dan Pickering, founder and CIO of Pickering Energy Partners, called the idea 'terrible.' 'This would be a job half-finished that creates more long-term problems than it solves in the short term,' he told CNN. Patrick De Haan, head of petroleum analysis at GasBuddy, warned that withdrawal would amount to 'surrendering the strait to Iran,' allowing the regime to 'attack vessels and charge tolls,' which would guarantee higher energy prices worldwide.

“It would be a catastrophic failure. It’s hard to see how throwing in the towel in the strait solves anything.” — Patrick De Haan, head of petroleum analysis at GasBuddy

Former Trump Officials Sound the Alarm

Even within Trump’s own administration, dissenting voices have emerged. Dan Brouillette, who served as Energy Secretary during Trump’s first term, told Fox Business that a U.S. withdrawal without reopening the strait would be 'highly problematic.' 'You’re simply going to push this issue into a future administration,' he said. Brouillette’s concerns reflect broader unease within the national security establishment that any perceived retreat from the Middle East could embolden adversaries and erode U.S. credibility. The idea that Iran would voluntarily reopen the strait after a U.S. withdrawal is, in the words of one senior official, 'a fantasy.'

Why the U.S. Can’t Ignore the Strait of Hormuz—Even as the Top Oil Producer

The United States is now the world’s largest oil producer, pumping a record 13.6 million barrels per day in 2023, according to U.S. Energy Information Administration data. Yet despite this energy dominance, America remains deeply tied to global oil markets. U.S. refiners, particularly on the East and West Coasts, rely heavily on imported heavy crude oils from Canada, Mexico, and the Middle East to complement light domestic shale oil. These refiners blend the lighter U.S. oil with heavier imports to produce gasoline, jet fuel, and diesel. In 2023, the U.S. imported an average of 6.2 million barrels of crude oil per day, with nearly 1.5 million barrels coming from Persian Gulf nations—most of which must transit the Strait of Hormuz. When the strait is closed, these imports grind to a halt, forcing refiners to pay higher prices on the global spot market or reduce production.

How a Closed Strait of Hormuz Drives Up Prices in America

The impact of a closed Strait of Hormuz is felt far beyond the Middle East. When oil supplies tighten, the price of Brent crude—the international benchmark—rises. This, in turn, lifts gasoline prices at U.S. pumps because American refiners compete in a global market for crude. In late June 2024, the national average gas price hit $4.00 per gallon, up from $3.50 a month earlier, according to AAA. States like California and New York, which rely heavily on imported gasoline and diesel, are particularly vulnerable. 'Both California and the New York region depend on product imports and will therefore face shortages once Asia and Europe begin to face them,' said Claudio Galimberti, chief economist at Rystad Energy. Even in oil-rich Texas, drivers are feeling the pinch as refineries cut runs due to higher input costs.

The Geopolitical Risk Premium: Why Prices Stay High Even After a Crisis Passes

Investors don’t just price in current supply disruptions—they also factor in future risks. If Iran retains control of the Strait of Hormuz, markets will demand an additional return, known as a geopolitical risk premium, to compensate for the threat of future closures or attacks. 'There would be a significant geopolitical risk filtering through the market because Iran could do it again,' said Andy Lipow, president of Lipow Oil Associates. This premium can add $5 to $10 per barrel to the price of oil, translating to a 10- to 20-cent increase at the pump. Even if the strait were to reopen tomorrow, the memory of recent disruptions could keep prices elevated for years.

Could U.S. Oil Exports Fill the Gap? Not Likely, Analysts Say

Since the U.S. lifted its 40-year ban on crude oil exports in December 2015, American oil has flowed to more than 50 countries. In 2023, the U.S. exported an average of 4 million barrels per day, up from just 400,000 barrels in 2015. While this has helped stabilize global supply in some regions, it has not insulated the U.S. from price shocks. 'U.S. producers aren’t going to say, ‘We can’t give you the oil because we need to keep prices cheap here in the U.S.,’' said Bob Yawger, commodity specialist at Mizuho Securities. 'They will sell that barrel to them every time.' As foreign buyers outbid domestic refiners, U.S. consumers could face even higher gasoline prices as supplies tighten at home.

What’s Behind Trump’s Sudden Shift? Strategic Bluff or Real Change?

Trump’s proposal to withdraw from Iran without securing the Strait of Hormuz has left analysts scrambling to understand his motives. Some suggest it may be a negotiating tactic—intended to pressure regional allies to take greater responsibility for securing the waterway. Others speculate it could be a 'head fake,' designed to soften public opposition before a potential U.S. military escalation. 'This doesn’t add up,' said Art Hogan, chief market strategist at B. Riley Financial. 'It’s a petulant outburst, kind of like crossing your arms when your mom says you can’t go to a party.' Yet Hogan’s analogy may understate the stakes. The Strait of Hormuz is not just a regional issue—it’s a linchpin of the global economy, and any miscalculation could have cascading consequences.

The Broader Implications: Energy Security in a Fragmented World

The current crisis underscores a harsh reality: the world is more interconnected—and more vulnerable—than ever. Europe’s dependence on Russian gas during the Ukraine war exposed the dangers of energy over-reliance. Now, Asia’s growing demand for Middle Eastern oil, combined with the U.S.’s fluctuating role as both producer and consumer, creates a delicate balance that can be upset by a single geopolitical tremor. Vikas Dwivedi, global oil and gas strategist at Macquarie Group, put it bluntly: 'Everybody involved can say whatever they want and declare victory, but until the Strait of Hormuz opens, the problem will just keep building.' This sentiment captures the frustration of policymakers and investors alike—there are no easy fixes, no quick exits, and no simple solutions when the world’s most critical oil chokepoint is under threat.

Could Military Action Force the Strait Open? The Risks of Escalation

Trump’s Monday Truth Social post hinted at a far more aggressive path: 'If the Hormuz Strait is not immediately ‘Open for Business,’ we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalination plants!)' Such airstrikes would almost certainly provoke a severe Iranian response, potentially shutting down the strait entirely through retaliatory attacks or mining operations. The Kharg Island oil terminal, Iran’s largest, sits just 25 miles inside the strait and is a prime target for disruption. Any military action risks triggering a regional war, further destabilizing oil markets, and driving prices even higher. 'It doesn’t end the crisis,' said Bob McNally, president of Rapidan Energy Group. 'This is not a short-term fix.'

What Happens Next? Scenarios for the Strait of Hormuz

As of late June 2024, three plausible scenarios are emerging: first, a negotiated de-escalation in which Iran agrees to reopen the strait in exchange for sanctions relief or other concessions; second, a prolonged closure with Iran tightening control, leading to sustained high oil prices and economic strain; and third, a military escalation that temporarily reopens the strait but triggers long-term instability. The first scenario appears increasingly unlikely given the depth of mistrust between Iran and the West. The second would deepen global recession fears, while the third could plunge the region—and the world—into a broader conflict. What is certain is that the status quo is unsustainable. 'There is no way to tilt the scales of global economics and pretend it’s not a problem,' said De Haan.

The Bottom Line: No Easy Fix for the World’s Most Vital Oil Route

The Strait of Hormuz is not just a regional flashpoint—it is the nerve center of the global energy system. Any attempt to walk away from it without resolving the crisis risks empowering Iran, destabilizing oil markets, and inflicting long-term damage on the U.S. economy and its allies. Whether through diplomacy, deterrence, or a painful reckoning, the world must confront the fact that the free flow of oil through the strait is non-negotiable. As energy analyst Claudio Galimberti noted, 'Both California and the New York region depend on product imports—and those imports won’t flow if the strait is closed.' That dependency is a stark reminder that in an interconnected world, no nation is an island.

Key Takeaways

• The Strait of Hormuz handles 20% of global oil supply; its closure is the largest supply disruption in decades, driving gas prices above $4/gallon in the U.S.
• President Trump proposed withdrawing U.S. forces from Iran without securing the strait’s reopening, claiming prices would fall—but experts warn this would worsen long-term instability.
• The U.S. is the world’s top oil producer but still relies on imported crude for refining; disruptions in the strait force refiners to pay higher global prices, raising costs for American consumers.
• A U.S. withdrawal could empower Iran to control the strait, impose tolls, or attack vessels, embedding a geopolitical risk premium into oil prices for years.
• Military escalation may reopen the strait temporarily but risks triggering a broader regional conflict with catastrophic economic consequences.

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