In the late night of May 3, Trump unveiled the "Freedom Plan" on Truth Social, ordering the U.S. Navy to "escort" neutral country merchant ships trapped in the Strait of Hormuz through the war zone. The deployment announced by CENTCOM that night consisted of 15,000 personnel, over 100 aircraft, several drones, and a missile destroyer fleet. In the first wave of action, two merchant ships flying the American flag successfully passed through.
24 hours later, he personally hit the pause button.
What happened in between provided a more precise footnote to this 48-hour period than any ceasefire memorandum. In the early hours of May 4 Beijing time, Iran fired 12 ballistic missiles, 3 cruise missiles, and 4 drones towards the UAE. One drone broke through successfully, hitting an oil tank in the Fujairah industrial area, injuring 3 Indian workers. At the same time, U.S. forces sank 6 Iranian speedboats at the western entrance of the Strait of Hormuz. The UAE Ministry of Education announced that all schools and kindergartens nationwide would switch to online teaching from Tuesday to Friday. For a country where energy exports account for nearly a third of GDP, it was the first time they remotely pressed the button for their children.
The oil market's reaction was faster than the news. Brent surged by 5.8% in a single day, closing at $114.44 per barrel, a 4-year high. WTI also rose by 4.4% to close at $106.42. The next day, Trump announced the suspension of the "Freedom Plan," and oil prices promptly gave back half of the gains.
This curve is the true strength meter of this ceasefire.
It's Not About Ceasefire, It's About How Long Oil Prices Can Hold
To understand these 48 hours, one must first understand that the ceasefire agreement on April 7 was highly asymmetric from the beginning.
That day, Trump submitted a memorandum to Congress, declaring that the "hostile actions" against Iran had been "terminated." From that moment on, the U.S. and Iran maintained a full four weeks of no fighting. However, beneath the ceasefire agreement were two sets of irreconcilable demands. The U.S. demanded Iran to abandon enriched uranium, while Iran demanded the U.S. military to stop blockading Iranian ports. In reality, the U.S. continued the blockade, and the IRGC continued to block the Strait of Hormuz.
The true situation in the Strait of Hormuz is more glaring than the headlines. According to S&P Global Market Intelligence data, only 4 ships passed through the strait on May 3, compared to over 120 ships per day before the conflict. The latest brief from the International Maritime Organization shows that about 20,000 seafarers are still stranded on 2,000 vessels, with flags mainly from India, the Philippines, Pakistan, and China.
This is not a ceasefire. This is a pause. The intense firepower in the early hours of May 4 tore off the word "pause."
Trump announced a suspension of the "Freedom Plan" 24 hours after its launch, citing three reasons: "requests from Pakistan and other countries," "significant progress in negotiations with Iranian representatives," and "considering the tremendous military success we have achieved in the Iran campaign." However, another fact omitted in this announcement is that New York oil prices are skyrocketing, hitting American families' May gasoline bills. The average retail gasoline price has risen to nearly a four-year high, with only six months left until the midterm elections.
Secretary of State Pompeo reiterated the red line at a White House briefing. "Iran must agree to nuclear program demands and reopen the Strait of Hormuz." Everyone understood. Faced with the reality of soaring oil prices, the red line itself is undergoing a transformation.
Why $114?
Since the start of the war, Brent has surged over 50% from around $76 at the beginning of the year, with a global market facing a daily supply gap of about 14.5 million barrels. The Strait of Hormuz accounts for two to three percent of global seaborne oil trade volume. Any news about this strait will be magnified by the market into leverage positions.
Goldman Sachs was blunt in its client report at the beginning of April: "If the Strait of Hormuz remains closed for another month, the average Brent price for 2026 will reach $100. If this situation persists for more than a month, the third-quarter average will spike to $120 per barrel."
This is not a scenario built on pessimistic assumptions. This is the benchmark scenario if the current situation extends for another 30 days.
Asset management institutions have reacted. Dan Ives of Wedbush threw out the widely quoted phrase in a client call on May 4: "You could say the ceasefire has ceased."
But more worth examining than the word "ceasefire" is the silent chain below it.
The first beneficiaries of the premium windfall were not the oil-producing countries in the Middle East but the farthest group trapped in the Strait. U.S. mainland shale oil companies hedged contracts this month at the highest marginal profit since the beginning of the year. Russia set a new high in the war by exporting ESPO crude oil to China via the Far East route. Venezuela's Orinoco heavy oil traded for the first time in the Asian market at a discount close to that of high-grade oil.
Asian refineries are doing something underrated. Floating storage at the key hubs of Singapore and Ningbo has significantly increased over the past 30 days. This is not speculation; it is a supply chain-level instinctive response. When a lifeline is hanging on the cliff's edge, everyone is stocking up.
Meanwhile, the often mentioned but rarely properly accounted for "hidden winner" is none other than the UAE. Its ports have been hit. However, what makes Fujairah the UAE's workaround of the Hormuz core hub is precisely because it is situated on the Indian Ocean side outside the strait. This attack has made global shipping companies realize that the UAE is the only country in the Middle East that has implemented "geopolitical hedging" at an infrastructure level. Within 48 hours of the attack, Fujairah's forward storage lease rates saw a significant increase.
A successful missile attack has paradoxically strengthened the attacked party's strategic scarcity.
A Ceasefire Market has Reversed
Trump's initiation of the "Freedom Plan" may indeed have aimed to leverage the strait. His almost immediate halt within 24 hours can almost be confirmed as him observing the transmission speed of oil prices to the consumer end. Retail gasoline prices touched a 4-year high, with only half a year left until the midterm elections.
Iran launching 12 ballistic missiles at Fujairah was perhaps a signal to the U.S. that it still has the capability. Its choice to only hit oil tanks and avoid U.S. military bases is essentially a form of intimidation but not full detachment. Iran's economy has relied on the post-2026 rise in oil prices to stay afloat and needs this war to maintain a controllable tension.
Both sides are tacitly keeping oil prices hovering above $100 but not letting it breach $130. The mediator of this war is not in Washington, not in Riyadh, and not in Geneva. It is the red and green lines on the intraday chart of the New York Mercantile Exchange.
Those who have no say in this equilibrium are the American households who cannot afford $5 per gallon of gasoline, the seafarers stuck on 2,000 cargo ships, and the chemical plant workers who have been forced to cut production to hedge against rising raw materials. The cost they bear is the one item that does not appear on the candlestick chart when pricing this "market ceasefire."
What is worth watching next are not the news headlines but the fine lines that the market has already started pricing in. How long is the window for the pause in the "Freedom Plan," and if it extends beyond two weeks without a signature, the market's credibility in the ceasefire will greatly diminish. Will Iran yield on the "enriched uranium" red line at this week's negotiation table in Oman, which has been the true deadlock of the past three rounds of talks? Saudi Arabia has idle capacity of around 2.7 million barrels per day; whether OPEC+ will initiate "unconventional production increases" at the next meeting will directly determine if oil prices can hold above $100 in the third quarter.
The focus of the next 48 hours is not on missiles, but on the candlestick chart.
The phrase repeatedly mentioned by Dalio can be used again, "Watching everything happening now is like watching a movie I've seen many times in history." Only this time, the movie soundtrack is no longer the sound of cannons, but the ticking on a Brent intraday chart.
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